Maximum PC

I currently have a d-link DSL-2540B asdl router. I have Centurylink dsl service for my internet. I want to set up a wireless access point so I can access the internet with my ipod touch and future laptop. I just got the ipod and I got the wap for free. The wireless access point I have is a d-link DWL-G700AP.

Would all I have to do is take a cable from an open port of the DSL-2540B and go into the lan port on the DWL-G700AP? Or would I have to buy the DSL-2640B?

It's completely up to you - either would work.
Advantage to getting the AP, instead of the 2640B: ease-of-placement. You can put the AP where it works best, and keep the existing modem/router where it is (which is probably where it works best.)
Advantage to replacing your current modem/router with the 2640B (instead of hanging an AP off of your LAN): one-box management.

Me, I'd get the AP.
And, yes, it pretty much is as simple as "plug it into the LAN, log into it, and configure the wireless."

The DWL-G700AP that you have looks to be a pretty solid unit. As long as you're happy with your router and 802.11g is good enough for you, then there's no need to buy anything else.

Yes I am happy with the router. I have tried different ones and this is the first one that doesnt just restart out of the blue. Kinda pain in the butt when you are playing games online and boom, modem resets.

As for connecting the ap, when I take a cable from the modem and plug it into the ap, that port will not light up on the modem. Am I missing something on the router that I have to enable in order to get the port to recognize the ap? I can move the cable for my xbox and for the computer to any of the 4 and it will light up. But when I plug in the ap, nothing happens.

Plugging the AP into the router with an ethernet cable should "just work." By moving a known good device to each port on the router, you've already verified that they're all good, so the AP should work when connected and powered up. Does anything beyond the power LED come on on the AP when connected to the router?

Try using a different cable to connect the AP to the router. It's not likely, but its always possible that you're using a bad cable.

Yes I have tried different cables and the same result. And yes the only light on is the power light. Nothing happens when I press the reset button on it either. I read somewhere that maybe the power supply is bad. So that would cause it not to completely boot. But I have no other power supply to test to see if its that. Its a 5v 2A power supply.