First, make sure that your router is broadcasting. From you posts, it does seem to be. The HTC Evo is not friendly with blinded routers.
Second, make sure that if you have controlled access set on your router, you include your phone's MAC. This seems to be what the problem might be seeing that is is attempting to connect but not completing the process.
Third, is step two is good, make sure you are checking your password as you type it in. It would also be helpful if you double check that password on your router just to ensure accuracy.
Fourth, if step two and three is good, then change your router setting to encryption. If your phone is able to connect then is was a security error within your router. If it does not connect still, try using another device, not a computer, to connect to your router as it is (without encryption). If you get the same result, have the router check for firmware updates and install if necessary. If the other device is able to connect, enable the encryption on your router again and see if the other device is still able to connect. If the other device is able to connect both ways to your router, then the issue is within your Evo. You will need to have it checked with your carrier. If it has been rooted, then I would recommend to return it to a rooted status. You can do that by going to
Welcome to HTCdev.
****Notes****
The best way to run an encryption on a current router is AES. This will allow most devices to connect and communicate more efficiently between themselves to ensure a proper connect.