Yes, well this is the first time you'd actually provided something concrete I can go on.
First thing to try (not likely to work): go into cmd and type:
ipconfig /release
ipconfig /renew
That will attempt to get a new IP address from the DHCP server. Probably if you can't get an address to begin with, this won't help.
The next thing that almost certainly will work, requires a little more effort, and isn't a great solution if you sister uses her laptop elsewhere than your house. But it should at least confirm that the laptop can handle WPA2 and work with your router.
On your router, you need to find the DHCP Server configuration part. There will be a pool or range of IP addresses. Based on the IP address you gave earlier (192.168.0.1) I would guess that this range is probably 192.168.0.2 - 192.168.0.128. But it could be any block of IP addresses, like 192.168.0.2 to 192.168.0.255. If you can see that this is only configured with a single address (ie, only 1 computer can connect at a time), then that is likely your problem - increase the range so it's bigger than 1 IP address. I wouldn't expect there would only be 1 IP address, but you might have configured something wrong.
Once you've found out what the range is, you need to pick an IP address that is outside the range, but still in the same subnet. If the range is 192.168.0.2 - 192.168.1.128, then you can use IP address 192.168.1.130. If the range is the full block of 255 addresses, from 192.168.0.2 to 192.168.0.255 then you'll need to modify the top end of the range so it's smaller, like 128. If your range was 192.168.0.10 to 192.168.0.80 for example, then you could use 192.168.0.90 or .81 or .83, just as long as it wasn't inside that range in the DHCP server on the router (or you could get IP address conflicts).
Once you've found an IP address outside the pool but still in the same subnet, you need to apply this as a static address to your sister's wireless connection. Here's screenshot instructions for how to change it in Vista:
http://portforward.com/networking/static-vista.htm Skip to step 5 because the earlier steps won't help you on your sister's computer anyway.
For the IP address you'll want the one we found earlier, eg 192.168.0.130. The netmask will be 255.255.255.0 (windows will probably fill that in for you automatically) and the default gateway will be the IP address of your router, which should be 192.168.0.1 (from info you provided earlier). For DNS and alternate DNS, put in 8.8.8.8 and 8.8.4.4. These are google's DNS servers so they'll work for you just fine - ideally you should use your ISP ones, but for the sake of just getting your connection working, google's will be fine.
None.