Personally, I wouldn't use the SMC utility. Try the Windows Network utility, select your router, and enter the password. I suspect that right now, the Network status would show Limited Connectivity.
You need to install the driver disk that came with the USB adapter. Your PC correctly pointed out that the internal WI-FI adapter is not working but the USB adapter should be showing on the taskbar of the driver is installed correctly.
SOURCE: SMC EZ Connect 2862W-G does not see Linksys network
It shows that your wireless router and wireless adapters are both working. One thing to try is changing your wireless channel. Since you are already using 11, try maybe 1 or 9. Check if your SMC adapter will pick up the wireless signal.
By the way, how far is your computer (using the SMC adapter) to your wireless router?
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