Laggy gameplay

Hi, I've recently purchased Guildwars factions and at times there is unexplained lag - to the point where i get droped from game etc. I looked thru the forums, and the solutions don't seem to work for me. This problem only happened after i installed factions.

(That is, i didnt have the problem when i was playing prophesies a few months back.)

Errors that i've gotten : 07

Specs
Amd 2400+ XP (1.99 ghz)
1gb Ram
9600 ATI radeon running Omega 3.8.221

DSL connection, 512 dl, 256 up
Linksys router Befw11s4,
(Static ip, Ports for GW forwarded)

Windows update/AV does not update in background.

Stuff tried:
Updated net framework, still nothing
Removed Spyware, problem still remains.
Defrag HDD, still no change.

Any ideas, help would be appreciated.

I've had the same problems, except it dissconectes me from my dail up as well SO I have to REDIAL to reconnect and this COSTS ME MONEY, so i actually do pay to play because GW dissconects me from the net. Nothing else dc's me from the net. But no one cares if my phone bill is +$20 because of dc's