What is the difference between WAP & WAP(2) encrypting on a wireless router?

Answer 1

I assume that you mean WPA, not WAP.

The original WPA specification required the use of a back-end RADIUS server to provide for authentication of the connection requrest. No big deal in an enterprise setting but a deal-breaker in a SOHO environment.

WPA(2) simply provides for a single box solution (your wireless router or access point) without a separate authentication server.