DHCP wont lease IP Address's on 877 WLAN but does on wired connections

Question

We have set up an 877 with wireless in one of our remote offices and come across a problem not seen before. (Set many 877's up before).
The dhcp configured on the router wont lease to wireless devices only to wired devices.
Even giving the wireless devices a static IP the traffic doesnt seem to pass although the wifi connection says connected on the laptops.
The config is as follows (pretty basic, internet access and 1 vpn tunnel).....
Please can anyone advise if something is wrong???
sh run
Building configuration...
Current configuration : 3869 bytes
version 12.4
no service pad
service timestamps debug datetime msec
service timestamps log datetime msec
no service password-encryption
hostname Router
boot-start-marker
boot-end-marker
enable password XXXXXXX
no aaa new-model
dot11 syslog
dot11 ssid PPWireless
vlan 1
authentication open
authentication key-management wpa
wpa-psk ascii 0 XXXXXXX
ip cef
no ip dhcp use vrf connected
ip dhcp excluded-address 192.168.40.1 192.168.40.24
ip dhcp excluded-address 192.168.40.101 192.168.40.254
ip dhcp pool DHCP
network 192.168.40.0 255.255.255.0
domain-name XXXXXXXX.local
dns-server 172.16.1.3 194.72.9.38
default-router 192.168.40.254
lease 3
ip domain name XXXXXXXXX.local
ip name-server 172.16.1.3
ip name-server 194.72.9.38
ip name-server 194.72.9.34
username admin privilege 15 password 0 XXXXXXXX
crypto isakmp policy 1
encr 3des
authentication pre-share
group 2
crypto isakmp key finance address 213.123.142.54
crypto ipsec transform-set ESP-3DES-SHA esp-3des esp-sha-hmac
crypto map SDM_CMAP_1 1 ipsec-isakmp
description Tunnel to213.123.142.54
set peer 213.123.142.54
set transform-set ESP-3DES-SHA
match address 101
archive
log config
hidekeys
bridge irb
interface ATM0
no ip address
no atm ilmi-keepalive
dsl operating-mode auto
interface ATM0.1 point-to-point
description $ES_WAN$
pvc 0/38
encapsulation aal5mux ppp dialer
dialer pool-member 1
interface FastEthernet0
interface FastEthernet1
interface FastEthernet2
interface FastEthernet3
interface Dot11Radio0
no ip address
encryption vlan 1 mode ciphers tkip
broadcast-key vlan 1 change 30
ssid PPWireless
speed basic-1.0 basic-2.0 basic-5.5 6.0 9.0 basic-11.0 12.0 18.0 24.0 36.0 48.0 54.0
station-role root
bridge-group 1
bridge-group 1 subscriber-loop-control
bridge-group 1 spanning-disabled
bridge-group 1 block-unknown-source
no bridge-group 1 source-learning
no bridge-group 1 unicast-flooding
interface Dot11Radio0.1
encapsulation dot1Q 1 native
ip nat inside
ip virtual-reassembly
no cdp enable
interface Vlan1
no ip address
bridge-group 1
interface Dialer0
ip address negotiated
ip nat outside
ip virtual-reassembly
encapsulation ppp
dialer pool 1
dialer-group 1
ppp authentication chap callin
ppp chap hostname XXXXXXXXXXXXXXXXXX
ppp chap password 0 XXXXXXXXXXXXXX
crypto map SDM_CMAP_1
interface BVI1
description $ES_LAN$
ip address 192.168.40.254 255.255.255.0
ip nat inside
ip virtual-reassembly
ip forward-protocol nd
ip route 0.0.0.0 0.0.0.0 Dialer0
ip http server
no ip http secure-server
ip nat inside source route-map SDM_RMAP_1 interface Dialer0 overload
access-list 100 remark CCP_ACL Category=2
access-list 100 remark SDM_ACL Category=16
access-list 100 remark IPSec Rule
access-list 100 deny ip 192.168.40.0 0.0.0.255 172.16.1.0 0.0.0.255
access-list 100 permit ip 192.168.40.0 0.0.0.255 any
access-list 101 remark SDM_ACL Category=4
access-list 101 remark IPSec Rule
access-list 101 permit ip 192.168.40.0 0.0.0.255 172.16.1.0 0.0.0.255
dialer-list 1 protocol ip permit
route-map SDM_RMAP_1 permit 1
match ip address 100
control-plane
bridge 1 protocol ieee
bridge 1 route ip
line con 0
no modem enable
line aux 0
line vty 0 4
password finance
login
scheduler max-task-time 5000
end
Router#

Answer 1

Hi, You have some mistakes on your configuration.
1- bridge-group 1 has to be under the dot11 radio 0.1 interface and not under the dot11radio 0 interface
2- ip nat inside has to be only under bvi 1 and not anywhere else.
I will paste for you your modified router config.
give it a shot.
dot11 ssid PPWireless
vlan 1
authentication open
authentication key-management wpa
wpa-psk ascii 0 XXXXXXX
ip dhcp excluded-address 192.168.40.1 192.168.40.24
ip dhcp excluded-address 192.168.40.101 192.168.40.254
ip dhcp pool DHCP
network 192.168.40.0 255.255.255.0
domain-name XXXXXXXX.local
dns-server 172.16.1.3 194.72.9.38
default-router 192.168.40.254
lease 3
ip domain name XXXXXXXXX.local
ip name-server 172.16.1.3
ip name-server 194.72.9.38
ip name-server 194.72.9.34
username admin privilege 15 password 0 XXXXXXXX
crypto isakmp policy 1
encr 3des
authentication pre-share
group 2
crypto isakmp key finance address 213.123.142.54
crypto ipsec transform-set ESP-3DES-SHA esp-3des esp-sha-hmac
crypto map SDM_CMAP_1 1 ipsec-isakmp
description Tunnel to213.123.142.54
set peer 213.123.142.54
set transform-set ESP-3DES-SHA
match address 101
archive
log config
hidekeys
bridge irb
interface ATM0
no ip address
no atm ilmi-keepalive
dsl operating-mode auto
interface ATM0.1 point-to-point
description $ES_WAN$
pvc 0/38
encapsulation aal5mux ppp dialer
dialer pool-member 1
interface FastEthernet0
interface FastEthernet1
interface FastEthernet2
interface FastEthernet3
interface Dot11Radio0
no ip address
encryption vlan 1 mode ciphers tkip
broadcast-key vlan 1 change 30
ssid PPWireless
speed basic-1.0 basic-2.0 basic-5.5 6.0 9.0 basic-11.0 12.0 18.0 24.0 36.0 48.0 54.0
station-role root
interface Dot11Radio0.1
encapsulation dot1Q 1 native
bridge-group 1
bridge-group 1 subscriber-loop-control
bridge-group 1 spanning-disabled
bridge-group 1 block-unknown-source
no bridge-group 1 source-learning
no bridge-group 1 unicast-flooding
interface Vlan1
no ip address
bridge-group 1
interface Dialer0
ip address negotiated
ip nat outside
ip virtual-reassembly
encapsulation ppp
dialer pool 1
dialer-group 1
ppp authentication chap callin
ppp chap hostname XXXXXXXXXXXXXXXXXX
ppp chap password 0 XXXXXXXXXXXXXX
crypto map SDM_CMAP_1
interface BVI1
description $ES_LAN$
ip address 192.168.40.254 255.255.255.0
ip nat inside
ip virtual-reassembly
ip forward-protocol nd
ip route 0.0.0.0 0.0.0.0 Dialer0
ip http server
no ip http secure-server
ip nat inside source route-map SDM_RMAP_1 interface Dialer0 overload
access-list 100 remark CCP_ACL Category=2
access-list 100 remark SDM_ACL Category=16
access-list 100 remark IPSec Rule
access-list 100 deny ip 192.168.40.0 0.0.0.255 172.16.1.0 0.0.0.255
access-list 100 permit ip 192.168.40.0 0.0.0.255 any
access-list 101 remark SDM_ACL Category=4
access-list 101 remark IPSec Rule
access-list 101 permit ip 192.168.40.0 0.0.0.255 172.16.1.0 0.0.0.255
dialer-list 1 protocol ip permit
route-map SDM_RMAP_1 permit 1
match ip address 100
control-plane
bridge 1 protocol ieee
bridge 1 route ip
line con 0
no modem enable
line aux 0
line vty 0 4
password finance
login