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There are a number of online guides explaining the process of setting up wireless Internet at home or small office and also detailed instructions in securing the network.

How to install router and setup WiFi at home – microsoft.com/networking/wireless 

How to secure you wireless Internet  connection – about.com/wifisecurity

Below is the order of best encryption methods available. Go from top to bottom, depending on the supporting hardware and software of the wireless devices.
WPA2 (AES) is the best encryption method currently available
WPA2 (TKIP)
WPA (AES)
WPA (TKIP)
WEP

WPA is good enough for most home users.  WEP can very easily be hacked but considered better then no security at all.

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