You are absolutely correct. I will need to collect and provide more info.
BTW, the nexus is not yet rooted.
The phone is a rooted LG Optimus Q running android 2.3.4
The custom rom I am using is the arq 2.1
from
http://androidarea51.com/arearomq-releases/%28rom%29-arearomq-v2-1-1106/The tether is included in the rom and I believe it is from
https://code.google and is called "android-wifi-tether"
It works great on the phone. Asks for su permission and when I click it says it is tethering. I then went to my Windows 7 laptop and found it listed as AndroidTether with no encryption.
The laptop connected with no difficulty. Signal strength "excellent".
On the Nexus AndroidTether did not appear on the wifi list and so I added it. Still would not connect to AndroidTether and nexus says "not in range" which I think means it cannot detect it. Not sure why.
Here is
another wifi problem that might provide a clue:
This is a new Nexus 7 (2 days old). My home wlan is wpa2-psk protected with a long complicated password impossible to type out. So I connected using my router's wps. Immediately connected the nexus.
Then I left home with the nexus, and when I came home discovered the Nexus would not re-connect to my home wlan. I again had to resort to the wps which I really do not like. I assumed that for some reason nexus did not "remember" the password and perhaps that was because it was entered via wps.
Not likely, but just to check, I moved a text file containing the network password to the nexus, disconnected from the wlan and tried to manually reconnect using copy/paste to enter the password. Would not connect (yes it is the correct password and I've done this several times on other Windows devices).
So I think that for some reason there is a setting that is set wrong on the nexus. I am an old hand with computers but networks drive me crazy and I hate them.
Hope this sheds some light and thank you very much for taking the time to help.