
I am starting to wonder if perhaps it is a combination of firewall and an anti-virus scanning incoming information first that leads to that problem. As for the browser, I have only tried it on firefox. The problem is that the computer will have its cpu and memory usage nearing the maximum.

If the computer can run dvds perfectly, and the wireless runs perfectly, and the computer is using a cable connection to the router, it would make sense that the comp would run just fine. The computer runs fine when using a dvd player and skipping ahead at 32x speed or not. The video will do the same thing, it will load the first 30 seconds fine, but then it will just do a slide show for some time while running the audio perfectly. I have also tried watching a few movies on my computer, an old Pentium 4, with 512mb graphics card and 1.5 gigs of ram. ALso there are times where the load rate for the fast forward images will not load at all. Well, until about a few weeks ago when I would rewind or fast forward and 30 seconds of video will be grainy. I have netflix and I use it on my PS3, which is not far from the router, but it is wireless, flawlessly. Its likely your graphics card, or maybe lack of. What about Netflix (or Microsoft Silverlight?) might really slowdown playback? If it matters, the desktop uses Win7 Ultimate 64-bit. The main system drive is an Intel 120GB SSD, which isn't slow either, and the system has 4GB of RAM.

The d525 Atom motherboard has Nvidia Ion graphics and HDMI out, so I figured it'd be up to the task. It doesn't seem to be download speed because the download bar stays well ahead of the current play location, though the computer is at the 25ft end of an ethernet cable from the cable modem (wireless reception in the room is awful).

The computer plays ripped DVDs from a hard drive without any dropped frames.
However, when I try to watch Netflix on an Atom mini-desktop in another room, it will usually start by playing 30 seconds of the video smoothly, then starts skipping frames to something like 1 to 6 frames per second (at a guess). I've discovered the fun of Netflix's online service since my local Blockbuster folded and regularly watch it on my main laptop.
