Hi,
I am currently using my MacBook with my Netgear DG834G router, underneath the router, it reads that it is version 2.
Have you tried upgrading the routers firmware to the newest availible - I am currently using V3.01.29, which I think is a beta firmware, but I should say that ADSL performance has been great with this version fo the firmware and I havent been dissconnected for over 4 days.
Have you tried doing a hardware reset of the router? there is a small hole ont he back of the router between port 1 and the phone socket, which if you poke something inside and then hold for 5 seconds or so it will reset the router.
I am currently using WPA-PSK to secure my wireless network.
I would suggest doing a hardware reset and then trying to access the router without security enabled, and then playing with security after that.
oh and just a final word if you're updating the firmware (although perhaps obvious) I wouldn't advise doing so wirelessly - I did this once and the firmware corrupt....
Hope that helps - at least you know that the two are indeed compatible.
Andrew