Vic, turns out the root cause of your issue is that the RC4 cipher was removed in 5.2.5
Whether Fortinet is going to fix it (I mean putting RC4 cipher back into next maintenance release) or not - that is not so critical now (at least for me ). What is important - that explains the issue. Thank you, Bromont.
BTW, I received a similar response from TAC:
Development has reproduced this issue and opened a bug for further investigation.
Bug ID 0306827,Windows XP client failed to associate to FAP with local user group and remote Radius server
If they don't have plans to support XP any longer though, then, to avoid confusion, they should reflect that fact on Release Notes, and remove examples of how set Windows XP for WPA-Enterprise WiFi network from WiFi documentation.