wpa_supplicant wlan debug RaLink RT2760

Question

I'm attempting to use a RaLink RT2760 Wireless 802.11n 1T/2R Cardbus. This card auto-configures beautifully under Ubuntu 11.04, but I have a need for 10.04 LTS server, so I'm re-imaging.

I configure ethernet cards in 10.04 on a regular basis for work, but have never tried wifi. Here's hoping that this is a simple case of a forgotten step.

$ iwconfig
wlan0 RT2860 Wireless  ESSID:""  Nickname:"RT2860STA"
      Mode:Auto  Frequency=2.412 GHz  Access Point: Not-Associated
      Bit Rate: 1 Mb/s
      RTS thr:off    Fragment thr:off
      Link Quality=10/100  Signal level:0 dBm  Noise level:-87 dBm
      Rx invalid nwid:0  Rx invalid crypt:0  Rx invalid frag:0
      Tx excessive retries:0  Invalid misc: 0  Missed beacon:0

I'm assuming by the above that the driver is doing its job correctly.

Now for /etc/network/interfaces

auto wlan0
iface wlan0 inet static
    address 192.168.2.199
    gateway 192.168.2.1
    dns-nameservers 192.168.2.1
    netmask 255.255.255.0
    wpa-driver wext
    wpa-ssid MY_SSID
    wpa-ap-scan 1
    wpa-proto RSN
    wpa-pairwise CCMP
    wpa-group CCMP
    wpa-key-mgmt WPA-PSK
    psk hashed_password

Then I try to start it

$ sudo ifup wlan0
wpa_supplicant: /sbin/wpa_supplicant daemon failed to start
run-parts: /etc/network/if-pre-up.d/wpasupplicant exited with return code 1
ssh stop/waiting
ssh start/running, process PID

Any assistance much appreciated.

Edit 1

$ iwlist scan
wlan0    No scan results

This seems bad. The network is most definitely up and discoverable.

Edit 2

It looks like the boot cd installed me the rt2860 driver. According to a really old reference post on the forums, the RTxxx drivers may not be compatible with WPA2. I say may because I cannot find any up to date information on this issue. My network is secured WPA2-PSK AES.