Are you trading via the wifi room or GTS Rendezvous?
Rendezvous will work regardless, wifi must match.
I've been trading with my close friend who is WPA2, while I've been WPA2 for several months now.
Attempting to trade with RNC and Pidge, both who run WEP - they both encountered a connection error.
After investigating, I found that you must share the same security type to connect via the wifi room.
Switching my security over to WEP allowed me to trade with RNC, as well with other members who have the WEP security setting on PC.
However, going back and attempting to trade with my friend who has WPA2, I can no longer trade with her and receive the same errors that others were having when previously attempting to trade with me.
Switching back to WPA2 fixes this problem, or we've found that we can trade via GTS Rendezvous while being on different securities.
I'm not sure what tricks you've managed to be able to trade together, but multiple attempts at trading while having different securities have rendered the same affects.
If you want to send me a private message with the details of your trading process with your friend on different securities, then maybe I can attempt to locate the issue and fix it, but I've yet to find a solution other than switching security settings.