I was having similar problems with O/S 1.0.1.9 and can feel your pain. After I later updated to 1.0.1.10 everything worked fine for me. However, when I had the .9 OS I had inadvertantly entered my security key wrong and after I tried with the proper key it would never connect. I talked with Ed Moore at AP and he had me do the update to .10 OS, as you have done. This time I entered the security key with prooper spelling the first time and everything seems to work great.
When the OS is updated all wifi settings are reset and so network SSID's and keys are new and fresh so it's like starting from scratch. This may be the reason my key worked fine. Or it may in fact be that OS .10 fixed things. Had I been in beta testing mood and knowing what I know now I could have tried entering the wrong key after the OS .10 update to see if thats what it was. Now that I have had sucess I may just go back and try again when I get a chance.
While the above doesn't alleviate your present frustration, Ed said he was going to talk to Walter about the issue. On a related note Ed said there was another update coming that could allow acess to open networks that require log-ins (like hotels like to do). Sometimes hotels will splash on their own home page requiring their guests to agree to some sort of terms of service even thought the wireless network itself is not secured. As I pilot I find myself at hotels on occasion on at FBO's with wifi. That particular open network hack would be a nice thing to have with the 720.
One thing you have to give AP credit for is their real-time support.
In summary I would suggest cross-checking your security key carefully for syntax and case. Then if is there is a way do a "re-load" of OS .10, thereby resetting wifi connections completely. Then make sure to get the exact secuirty key entered properly right the first time. The silly OS shouldn't be that picky about the first connection set-up but that's my suspicion at this point.