Is it on ? ..Not totally kidding ;-}
Intel's Centrino ..Wireless is crap ...but I digress.
Since your in Ad Hoc mode ..make sure that the ACER knows this, since this is not the standard default Infrastructure Mode.
It's possible it's looking for an SSID .( which is not used in Ad Hoc ?? )
Also Given that B routers are $20-$30 (after Rebate ), you might consider going that route.
Usually means better range ..Desktop does not have to be on ..you can turn off ICS ;-]..etc.
And yes ..bad card ...quite possible..but check card connection , is it seated?
I don't have a C110 , but on Compaqs' there is also a bios enable.
Also check that your ethernet is not Bridged or that you now have a wirless Gateway on the ACER . XP's network wizard is morronic and can install both and both are totally unecessary.
Also Centrino 802.x security settings are known to cause major problems with older equipement.
Not your issue(s) ...I think ..but it might help someone else.