My recent upgrade has proven very sucessful in the lag department.
Non-european player, Windows 2000, Amd dual core 5000, 2G DDR2 800
On-board nVidia 8200 256m (9800 GTX 512 ... be here in 2 days)
I have experienced NO lag issues, other than the small lag spikes i get when large groups pass by, or fort wars where i experience some minor lag.
It seems as if you might have stumbled onto something here with the PC being apart of the lag issues, or at least contributing to slower / weaker performance.
Old system: Windows 2000, P4 2.8 , 2G DDR 400, nVidia 6800 GT 256 .... experienced lag all the time, especially during fort wars where I could barely move.
Very imformative thread here ...........