That bug has been opened on: https://launchpad.net/distros/ubuntu/+source/gnome-system-tools/+bug/42036

"On an Ubuntu system the wireless network can be selected from a list of available networks by following:

  System->Administration->Networking->Properties->Network Name

This drop-down shows the available (scanned/non-hidden) wireless networks and whether they are open or require a WEP key.

The status of whether the network is WEP'ed or not is frequently incorrect when compared to the known results displayed by:

  $ sudo iwlist $interface scan

and the wrong icon is shown in the drop down. In the following screenshot, 2 of the networks are displayed corrected and two incorrectly (both encrypted and non-encrypted networks) and the drop-down can be compared to the output of 'iwlist' in the adjecant terminal:

  http://www.paul.sladen.org/ubuntu/bugs/network-conf-wireless-protected.png"