It happens to me sometimes, but rarely ever, when turning on Wi-Fi in settings, or says error, just like what it says when attempting to use the tether setting. A simple reboot always works for me though(actually just had to reboot before posting this)
To me that sounds like a mod/theme or restored/corrupted data....
we used to have this issue with some of the build.prop tweaks that are out there and some of the kernels, so if you have changed either of those that could be the culprit.
If you haven't changed those, have you restored any system data/apps? If so, don't do that, because it causes this kind of issue.
If none of the above, and you really want to fix it or narrow it down, backup then wipe the sd card and do a full install and run it to see if it happens again, if it does I would say it's hardware vs software because it shouldn't happen with the ROM and a clean install/sd.
I always come back to this advice: when changing ROMs, wipe the sd and do a full clean install, my ROM install will wipe everything except the SD: system, data, cache... then make sure everything works, if not then it's a hardware or ROM issue... This ROM is pretty well vetted so I think it would be tough to find an issue that's due to the ROM vs Hardware or restored data or a dirty SD (by dirty I mean it has files on it from prior ROMS etc.)
Last but not least, you could have an actual hardware issue causing the WIFI issue like overheating battery or wifi radio etc. Easiest way to check that is to flash back to stock and see if the issue comes up or not.
