I don't know how many times I've answered to this specific problem, so here's yet another attempt to clarify the issue of P2P and routers:
Routers are usually not designed with P2P in mind. P2P is using a lot of TCP connections, thus requiring a lot of processing power of whatever device is handling the connections. This has nothing to do with bandwith, however, so even if you're not running torrents at maximum bandwidth, you're likely to put a lot of strain on your router's hardware (which is obviously inferior to your PC's).
Some of the more generic routers are equipped with processors just able to handle common tasks like web surfing and downloading and these models are barely able to handle P2P traffic properly. Compare this to your processor being too slow to render a video in real time and dropping frames.
The effects you're experiencing (timeouts and the like) are in fact symptoms of your router basically crapping out and being flooded by an amount of simultanious TCP connections it can't handle.
The only remedy to this is to limit the number of connections of your P2P client or simply exchanging your router for a higher quality model that is known to be designed for "professional" use (keep in mind to inform you about the CPU and RAM being used by these routers). With Windows XP SP2, there's also a chance of the built-in worm protection (TCP connection limiter) kicking in, restricting the amount of new connections and effectively slowing your internet down to a crawl. There's a patcher available to increase this limit
here.
I hope this information helps.
Jam it back in, in the dark.