I got it to work with WPA2/AES and the problem was related to the password I was using.
Yesterday, when troubleshooting with WEP,WPA and WPA2 , I always used the same password. My password is 13 characters with the last 2 characters are dollar signs ($$).
If I keep my same password but remove the last two characters ($$) , it works fine.
I am not sure if it's a password length issue and/or something to do with the dollar sign in my password.
The shortened password now works for WEP,WPA and WPA2.
Very strange..