Had a manager with a shiny new Dell Inspiron 220 laptop which was working ok but suddenly the Wifi stopped connecting. It reported a weak signal (1Mbps) when trying to connect to either of the company wireless access points.
On a hunch (I cannot recall my reasoning but I'm not sure it was desperation) I tried giving it a static IP address rather than using automatic settings (i.e. DHCP). Sure enough, this cured the problem, connected fine. I looked in the dhcp server logs and while it was not complaining that the IP address pool was all used, it did seem that all the IP addresses available were being used. I increased the number of IP addresses available to be allocated by the dhcp server and problem solved.
The big mystery to me is why Windows XP would report this as a problem with a weak signal? Isn't the access to the dhcp server and the allocation of the IP address at a layer above the wireless connection? Anyway, it's useful to be warned that the wireless diagnostics are misleading.
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Perhaps the wifi driver was trying to connect to *another* wireless access point - further away, probably not one of your own, since it could not get a lease from the near-by access point, and that's where the 'weak signal' bit comes from...