I need to rephrase my problem...
The network connection icon on the top right corner shows "no network connection" but I can see all the available wireless networks. With this I assume that driver is working fine and wireless connectivity is available without access point connectivity. Here is the output for iwconfig eth1

Code:

eth1      IEEE 802.11abgn  ESSID:""  
          Mode:Managed  Frequency:2.412 GHz  Access Point: Not-Associated   
          Bit Rate=144 Mb/s   Tx-Power:24 dBm   
          Retry min limit:7   RTS thr:off   Fragment thr:off
          Power Managementmode:All packets received
          Link Quality=5/5  Signal level=-256 dBm  Noise level=-90 dBm
          Rx invalid nwid:0  Rx invalid crypt:0  Rx invalid frag:0
          Tx excessive retries:0  Invalid misc:0   Missed beacon:0

Then I assume it is the problem of network configuration. When I right click to Edit Connections... there are 3 tabs available for the selected connection: Wireless, Wireless Security and IPv4 Setting. The Connect automatically option is selected and for the Wireless tab I have set the SSID and Mode: Infrastructure. The security in Wireless Security tab is set to WPA & WPA2 Personal and the password is set. For IPv4 Setting tab Method: Automatic (DHCP) is set. With this configuration when I apply to connect it asks again and again for "Authentication required by wireless network" with WPA & WPA2 Personal and password information but failed to connect. The configuration files looks like this:

Code:

/etc/sysconfig/network-scripts/ifcfg-eth1
# Broadcom Corporation BCM43228 802.11a/b/g/n
DEVICE=eth1
BOOTPROTO=dhcp
ONBOOT=no
HWADDR=08:ed:b9:e1:4d:ec

/etc/sysconfig/network
NETWORKING=yes
NETWORKING_IPV6=yes
HOSTNAME=localhost.localdomain

/etc/resolv.conf
# No nameservers found; try putting DNS servers into your
# ifcfg files in /etc/sysconfig/network-scripts like so:
#
# DNS1=xxx.xxx.xxx.xxx
# DNS2=xxx.xxx.xxx.xxx
# DOMAIN=lab.foo.com bar.foo.com

I had disabled the SELinux and Firewall since SELinux was preventing NetworkManager (NetworkManager_t) "execute" to ./dnsmasq (dnsmasq_exec_t).

Another issue is that when I try to save the Network Configuration (System->Administrator->Network) after editing the wireless device configuration it exits with an unhandled exception...

Code:

Component: system-config-network
Version: 1.3.99.21
Summary: TBf6c835f4 NCHardwareList.py:482:save:AttributeError: HwWireless instance has no attribute 'type'...

Also I don't know what to set in Wireless Settings tab of wireless device configuration if I will be able to save it.

With Windows 7 on the same system (dual boot) I have absolutely no issue in wireless connectivity with the following settings.
IPv4 connectivity, Access Point, Security type: WPA2-Personal and Encryption: AES
Please help to configure the wireless connection. Thanks.