Cannot connect to the Cisco 887W router via wireless Network

I recently installed a new Cisco 887W router @ my place and everything is working like a charm but the Macbook Air! The devices that are working currently are: iPhone, iPad, HP laptop, Nokia mobile phone.

I have checked two Macbook Air so far and both have the same problem with the wireless network! I even manually added the SSID to "Airport Preferred network setting" but still couldn't make it to work!
So the issue is the Macbook Air can detect the SSIDs intermittently however when it detects the SSID it doesn not connect to the wireless network and it comes up with the error of "connection timeout". I have used the command "show dot11 association" to see if the Macbook air will be detected on the router side unfortunately that was in vain.
The setting that I have on the router under SSID is "guest-mode" i.e. it broadcasts the SSID, security is WPA 2 with AES encyrption.

Any ideas or thoughts how to fix teh issue?