I run 128 bit encryption with two PC laptops-it works fine. What's probably happening is that you're not using connection sharing properly on your iBook, and the cable modem will not provide an address to more than one computer. You need to configure your iBook to not only wirelessly network, but to "share an Internet connection" so that the modem sees only one computer.
Here's a good link to Apple's Knowledge Base about Internet Connection Sharing.
Your PC must be set to "obtain an IP address automatically" for the basic sharing to work, but that's not a big problem to set up.