I don't know if I can help you much, it's so unspecified.

I've noticed that KaZaA can at times take a lot of resources even when it isn't doing much, and the same may be true for Bitorrent. The router should, if it's similar to mine, put priority on internal transfers, but one can't be sure, all I can think of is to completely disconnect the router from the internet, making the intra-connection the only one. And of course turning off KaZaA and Bitorrent respectively.

Making those driver upgrades probably wouldn't hurt either.

At least you know that your problem isn't one of those you've now examined, and maybe you have learned a bit more in the process as well.