That sounds rather odd... do you move the Infocast around regularly?  I can't think of any particular reason it would stop working normally, but still be able to connect when it's near the router... unless maybe the wireless antenna connection managed to jostle loose or something otherwise happened to the antenna.

Have you tried taking it to a friend's house or something and trying it on a different router?  Not entirely sure where that would leave you if it does work, but I don't know what else to try offhand (granted, I'm also very tired right now).  Duane might have a little more insight, but I believe he handles the Chumby service rather than hardware/support, so I dunno.

If you're feeling brave you could try dismantling it and checking out the antenna's current location, condition, and connection.