I have made up following ap configuration on my WGT634U, to have a WPA encrypted connection. The wlan-device is also bridged over br-lan to connect the WLAN with LAN.
Make sure you have installed following packages:

bridge
kmod-madwifi
wireless-tools
wpa-supplicant
hostapd-mini
hostapd-utils

ipkg install <package_name>

I don't use this part of the configuration. I have found a init script to init the wlan and start all nescessary services and brings up all devices.

network={
        ssid="my accesspoint"
        key="secret_key"
}

ctrl_interface=/var/run/hostapd
ctrl_interface_group=0
 
interface=ath0
bridge=br-lan
driver=madwifi
 
logger_syslog=-1
logger_syslog_level=2
logger_stdout=-1
logger_stdout_level=2
debug=0
 
dump_file=/tmp/hostapd.dump
 
ssid="my accesspoint"
 
macaddr_acl=0
own_ip_addr=127.0.0.1
 
wpa=3
wpa_passphrase=secret_key
wpa_key_mgmt=WPA-PSK
wpa_pairwise=TKIP CCMP

#!/bin/sh /etc/rc.common
 
START=90
start() {
        wlanconfig ath create wlandev wifi0 wlanmode ap
        iwconfig ath0 essid "my accesspoint"
        iwpriv ath0 wds 0
        wpa_supplicant -Bw -Dwext -iath0 -c/etc/wpa_supplicant.conf
        ifconfig ath0 up
        hostapd -B /etc/hostapd.conf
        brctl addbr br-lan
        brctl addif br-lan ath0
        brctl setfd br-lan 1
        ifconfig br-lan up
}
 
stop() {
        killall wpa_supplicant
        killall hostapd
        ifconfig ath0 down
        brctl delif br-lan ath0
        wlanconfig ath0 destroy
}

This script creates a new AccessPoint and adds the device to your LAN bridge (br-lan). When you stop this service, your connection will be interrupted for a short time.

To create the new configured accesspoint, just run

/etc/init.d/madwifi start