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Does USB work? Yes.
Does the distro version matter? No. I had the exact same problem under a more recent version (9.0 I believe). I downgraded because I was using a P.O.S. computer (ancient CPU,...

I haven't managed to get my wireless Linksys WUSB12 to work with Linux Mandrake =(
I was previously trying to get it to work in 9.0, but then wiped that and installed 8.2 (I have it running on a POS...