Thanks for sticking with this. I don't think we can get too hung up about the wireless throughput, because the problem is identical with a wired connection. The 120mbps, though, is what the router admin console says I'm getting.
I get a different problem when I stream DivX/Xvid. That just stops after about 30 minutes as though it has come to the end of the file, and goes back to the menu. I have to restart and fast forward to where it was previously.
Live TV is perfect. I can watch it for hours without a glitch.
I do have the network warning enabled, and sometimes before it misbehaves it shows an error, sometimes not.