I'm opening a virtual router through my laptop, and my Galaxy S2 can see and connect to it fine. However, when I try to do anything that requires the network, it doesn't work (for example, I can't browse). The top bar shows the wireless icon and the connection appears perfect. What is causing this?
What do you mean "do anything that is connected to a network"? Like access //mycomputername?
Connecting to a share on a computer connected to the same network is not part of wifi, it is another protocol called SMB or CIFS. Android does not support connecting to cifs out of the box. There are apps that allow you to browse for files on network shares, like Astro File Manager (with the SMB plugin).
There are Custom ROMs that do have built in support for CIFS, like CyanogenMod for example.