Have you tried to change the key back to the default and then see if that works?
Did it ever work with the default settings in the first place? It is always a good idea to remove encryption completely and if successful then try to connect adding encryption, changing the key, changing the SSID, etc. one step at a time.
Have you also checked that it is not something as simple as selecting the correct mode (108.11g or b) to correspond to your laptop's WiFi adaptor?
If your router has not been updated with the latest firmware from BT you should still be able to access your advanced configuration pages on:
http://gateway.2wire.net/mdcHave a look at the detailed log on
http://gateway.2wire.net/xslt?PAGE=J34 in case it reveals the reason for your wireless problem.
Finally, also have a look at the logs in your laptop to see if you can get a more detailed error message.
Sorry I can't be more specific but I am not using wireless on the 2700HGV and I do not have MSWindows to tell you where the logs are stored.
Hope this helps,
PS. Stating the obvious, but also check that your laptop's wifi manager has not saved the old password and keeps using it every time you try to reconnect.