Security failed = b1601 on jaguar 2004 x type. What is the cause?

Question

My car started and turned on fine. I have two keys.  One turned the car on and opened it etc.  The other only unlocked the car and would light up dash but not start car.  After a heavy rain I noticed the ignition was sticking when I started the car for a couple of days.  Then one morning, it started and turned off and gave me the "security failed" light on the dash.  When the security light gave the code B1601.  I called Jaguar but they said the key would not likely stop working but they couldnt tell me what is was without bringing the car in.  They are 3 hours away.  My car is a 2004 Jaguar x type 3.0.  Can you help?  We cleaned battery cables, checked fuses, cleaned the TCM because it appeared to of became loose after rain, charged the battery, used my son n laws brand new battery to see if that would help and I lubricated the ignition from the key hole.  Prior to this the battery light would come on and stay on after the car warmed up.