Both of those error messages look like failed attempts to get the wifi interface to establish WPA capability. The firmware has to be WPA compatible and the driver module has to be WPA compatible too.
It looks as if neither Bodhi nor Lubuntu could find the magic spot to initialise WPA abilities.
Whatever the Windows guys did to establish WPA in this wifi device (and you said it works fine on XP) - the Linux guys could not achieve it and as far as I can see looking at lots of websites the Linux developers just gave up on trying to make it work.
This is sad because the non-usb versions of the prism2 interface work fine under Linux. But you are stuck with the usb version.
Probably the only way this might be able to work is if you can force Puppy to use ndiswrapper to load the Windows driver.
But who can help with info for using ndiswrapper??
I will post any links I can find. Here is one interesting one from tempestuous:
http://www.murga-linux.com/puppy/viewto ... 774#145774
Here is a quote from the wikka:
http://puppylinux.org/wikka/HowToWifiFromCommand
...Puppy's Network Wizard is one of the best in the business. It supports all currently available Linux wifi drivers including the unconventional linux-wlan-ng (prism2) drivers, plus ndiswrapper. ....For wifi chipsets not supported by a native Linux driver, Puppy also includes ndiswrapper, which will "wrap" a Windows driver. Obviously, you must supply the Windows driver files.
ndiswrapper is a workaround solution, but sometimes it's the ONLY solution.
Also - this page looks very helpful:
http://www.puppylinuxforum.org/thread-596.html
(It is probably going to be necessary to manually unload any other prism2usb module that tries to load itself to your wifi interface during boot. Or else blacklist it (I think you can only blacklist after creating a savefile but I really don't know for sure)
.