Does your wireless connection have security set up on it? For example, if using WEP (56-bit or 128-bit), you have to enter a bunch of numbers or letters (0-9 or A-F)--10 for 56-bit or a lot more for 128-bit. If you don't do it correctly, XP may say that it's connected, but you won't ever get a proper IP address.
Having said that, if you're using WPA-PSK or WPA2-PSK (please say you're using one of these instead of WEP, as WEP is only minimally secure), again, you'll need a password (no character limit that I know of, just remember what you made the password--or check in your wireless access point or wireless router).
tl;dr version: Incorrect password. Try typing it in again...