2.4GHZ SSID won't work when encyrpted

I have been using the DGND3700 wireless router/modem for several months and had been very happy with it's performance until recently.
As of 23/6/12 I am unable to reliably connect the 2.4 GHZ wireless SSID whilst using any type of encryption. The 5 ghz SSID continues to work flawlessly.

If i remove all encryption both my Astone Media player and Playstation 3 are able to connect and maintain healthy network speeds. As soon as I re-enable any type of encryption I am still able to connect to the SSID (although sometimes with difficulty) however the connection speed is throttled so severely that it is not possible to use either device. When streaming a video file it will often play for a few minutes before stopping. When testing the connection on the PS3, the upload and download test will fail.

I have thus far tried the following:
- Check for new firmware, none found (currently using V1.0.0.17_1.0.17)
- Reset the router to factory settings
- Changed the encryption type
- Changed the mode
- Changed the broadcast channel
- Used different passphrases
- Rebooted the modem/router
- Rebooted the system
- Disconnected modem/router from PC Ethernet port
- Auto & manual DHCP setting set up (from wireless devices)


After trying all of these things I am still finding that the 2.4 ghz SSID will only work properly whilst no encryption method is used. Once encyrption is re-enabled the connectivity fails:

PC details:
Ethernet adapter: Netgear GA311
Windows Vista 64 bit
Wireless Card Access list is disabled
No port forwarding has been set
No IP addresses have been reserved
Use router as DHCP server is set to on
UPNP is on

I have logged a call with negear support but any other advice would be appreciated.

Regards
jpcam