Hi
If you are using the Cisco Supplicant for PEAP you will get a login prompt as explained below. this is from the following link
http://www.cisco.com/en/US/products/ps6366/products_qanda_item0900aecd801764fa.shtml
Q. Does PEAP provide single-login to Windows domains for passwords or OTP?
A. PEAP is compatible with single-login, which is a function of the client supplicant. Single-login function may be available with third-party utilities. The Windows PEAP supplicant (PEAP/MS-CHAPv2) supports single sign-on. Cisco's PEAP/GTC supplicant does not support single sign-on.
You say you are using PEAP/MSCHAPv2 so you have probably already read this.
I would make sure that the Cisco ADU is not configured for PEAP also and is not loaded.
also the properties for your a/b/g card have should have the "Use Windows to...." which it appears you are using
If the Aironet Desktop Utility is poping up a message it probably needs to be sett to manual load from automatic.
Bill