DIR 655 Loses Connection When Downloading

I have a very strange issue. I recently purchased a DIR 655 router. I currently have it set on mixed mode and I have turned off all firewalls and protected setup.
My desktop Mac connects to the router wirelessly no problem and runs fine, as does my Touch. I have an Acer laptop running Windows XP which exhibits very strange behaviour.
It will connect to the router and allow me to surf through Firefox or Explorer without a problem. As soon I start any kind of download (either through a 3rd party program like BitLord, or downloading a file, program update, etc through the browser) I initially get very good speeds, and then within 10 or 15 seconds of the download starting, I can watch the speeds get throttled back to next to nothing, and then fully stop at which point, while my laptop still tells me that I am "connected" and my signal strength is "Excellent", I am no longer able to access the internet.
As soon as I hibernate the laptop or disconnect from the router in any way and then reconnect, I am once again able to surf, but as soon as any download starts, the same issue occurs again.
I have carefully gone through all of my router settings, but I don't know what might be causing the problem. Anyone have any suggestions or seen this before?
TIA (thanx in advance)

Have a look at the MTU setting in the router. Default is 1500, try stepping down in increments of 100 and see if it helps. There are various programs designed to help you optimise MTU -- TCPOptimizer is the best known and free.

Can't give you a sensible answer as to the cause of your problem -- adjusting MTU is at least a foolproof option if the router appears to be choking on data.