Well, I did eventually reinstall Windows - but the problem remians!
All I've installed are m/board + video card dirvers, firewall (Kerio) and antivirus (AVG).
I again tried pluggin the PC directly into the cablemodem, and also tried a different ethernet cable - still problems. Assuming that the internet connection is OK (because the second PC didn't have any problems - or could that have been a lucky result? Probably need to test it out for a longer stretch of time to make sure) the only other thing to try is a new NIC (currently using the LAN port bulit in to the motherbaord).
Is there any free diagnostic software that can "stress test" your network adapter to find out if there's no hardware problem?