I too have the Dlink WDL-120 on my webplayer. I have a DWL-1000 as the base station and it works fine. I have another DWL-120 on my iopener and a DWL-650 for a laptop.
I have heard that Dlink is not so great in peer to peer, and while I find the DWL-1000 great (it has both an internal and external antenna and pretty good reception) the external antenna is a bit flimsy.
My webplayer is using the IE doc image, no hard drive, and the latest DWL drivers from the Dlink web site.
I am still amazed that to get this set up, all I had to do was open a little door, remove the DOC, flash it in my Websurfer, and put it back.
Anyway, did you load the configuration utility... while it comes up automatically with the 650 you have to manually launch it with the 120, as I am sure you know, but usually I find it tells me what is going on as I find the LED pretty uninformative.