Some of you may be aware that Android does not show adhoc networks.  More precisely, and quoting from the AOSP - Android uses wpa_supplicant as the platform interface to the Wi-Fi device. Your Wi-Fi driver must be compatible with the standard wpa_supplicant in addition to extensions added to the supplicant.

However, XDA forum member blackplatypus has found a modified wpa_supplicant which does show adhoc networks and has posted the patch and information in the XDA forums.

The patch modifies the wpa_supplicant code in the external/wpa_supplicant AOSP repo to make adhoc networks appear as regular Access Points with a (*) prefix.

Originally modified by a developer by the name of 'szym', blackplatypus applied the patch and compiled it for Froyo and has supplied the signed update.zip with the modified wpa_supplicant.

For more information and to download the file, check out the modification thread.