I have a motorola SBG900 wireless modem/gateway. When I tried setting
up WEP encryption I had trouble connecting to the internet. Therefore,
in an attempt to set up some type of security, I set it up to 'only
allow access to listed stations', thereby only allowing access to my
own pcs/laptops. Now when I'm online I get windows messages saying
things like 'you are connected to an unsecured/unencrypted network' or
something like that. My question: is my network vulnerable to attack?
Since I only allow access based on mac address that I have given
permission to, is there any reason I need to add encryption? This
should stop hackers from getting into the network, right? Can a hacker
still intercept the data being sent from my pc to my modem? I do have
the firewall that came with the modem set to 'medium' security.

There are two problems: First, as you apparently guessed, anyone can
watch all of the wireless traffic on your network. They can capture
passwords when you login to  any site which doesn't use SSL (HTTPS).
Another big problem is that the MAC address of a wireless device can
be changed, so anyone who wants to get on your network can change
their MAC address to your PC's MAC address. Whenever you're not on,
they can connect freely.