I am experiencing a very strange slowdown of the game video and audio. For lack of a better analogy... It's kinda like one of those dreams where you feel like you are "running underwater."

Even the DM's voice is sloooow. I run sloooooow. I jump sloooooow, and I fight slooooow. Get the picture?

There are also rubber-banding mobs, but my latency is 11-36 ms.

My drivers are up to date.
Code:
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System Information
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Time of this report: 5/25/2010, 08:09:56
        Operating System: Windows XP Professional (5.1, Build 2600) Service Pack 3 (2600.xpsp_sp3_gdr.100216-1514)
           Language: English (Regional Setting: English)
System Manufacturer: System manufacturer
       System Model: P5K-E
               BIOS: BIOS Date: 12/10/07 17:27:58 Ver: 08.00.12
          Processor: Intel(R) Core(TM)2 Duo CPU     E7200  @ 2.53GHz (2 CPUs)
             Memory: 3328MB RAM
          Page File: 1064MB used, 4146MB available
        Windows Dir: C:\WINDOWS
    DirectX Version: DirectX 9.0c (4.09.0000.0904)
DX Setup Parameters: Not found
     DxDiag Version: 5.03.2600.5512 32bit Unicode

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DxDiag Notes
------------
  DirectX Files Tab: No problems found.
      Display Tab 1: No problems found.
        Sound Tab 1: No problems found.
          Music Tab: No problems found.
          Input Tab: No problems found.
        Network Tab: No problems found.

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DirectX Debug Levels
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Direct3D:    0/4 (n/a)
DirectDraw:  0/4 (retail)
DirectInput: 0/5 (n/a)
DirectMusic: 0/5 (n/a)
DirectPlay:  0/9 (retail)
DirectSound: 0/5 (retail)
DirectShow:  0/6 (retail)

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Display Devices
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        Card name: NVIDIA GeForce 9600 GT
     Manufacturer: NVIDIA
        Chip type: GeForce 9600 GT
         DAC type: Integrated RAMDAC
       Device Key: Enum\PCI\VEN_10DE&DEV_0622&SUBSYS_C8613842&REV_A1
   Display Memory: 512.0 MB
     Current Mode: 1920 x 1080 (32 bit) (60Hz)
          Monitor: Plug and Play Monitor
  Monitor Max Res: 1600,1200
      Driver Name: nv4_disp.dll
   Driver Version: 6.14.0011.9745 (English)
      DDI Version: 9 (or higher)
Driver Attributes: Final Retail
 Driver Date/Size: 4/3/2010 15:55:31, 6432128 bytes
      WHQL Logo'd: Yes
  WHQL Date Stamp: n/a
              VDD: n/a
         Mini VDD: nv4_mini.sys
    Mini VDD Date: 4/3/2010 15:55:31, 10232128 bytes
Device Identifier: {D7B71E3E-4562-11CF-E37D-6AE800C2CB35}
        Vendor ID: 0x10DE
        Device ID: 0x0622
        SubSys ID: 0xC8613842
      Revision ID: 0x00A1
      Revision ID: 0x00A1
      Video Accel: ModeMPEG2_C ModeMPEG2_D 
 Deinterlace Caps: {6CB69578-7617-4637-91E5-1C02DB810285}: Format(In/Out)=(YUY2,YUY2) Frames(Prev/Fwd/Back)=(0,0,0) Caps=VideoProcess_YUV2RGB VideoProcess_StretchX VideoProcess_StretchY DeinterlaceTech_PixelAdaptive 
                   {335AA36E-7884-43A4-9C91-7F87FAF3E37E}: Format(In/Out)=(YUY2,YUY2) Frames(Prev/Fwd/Back)=(0,0,0) Caps=VideoProcess_YUV2RGB VideoProcess_StretchX VideoProcess_StretchY DeinterlaceTech_BOBVerticalStretch 
                   {6CB69578-7617-4637-91E5-1C02DB810285}: Format(In/Out)=(UYVY,YUY2) Frames(Prev/Fwd/Back)=(0,0,0) Caps=VideoProcess_YUV2RGB VideoProcess_StretchX VideoProcess_StretchY DeinterlaceTech_PixelAdaptive 
                   {335AA36E-7884-43A4-9C91-7F87FAF3E37E}: Format(In/Out)=(UYVY,YUY2) Frames(Prev/Fwd/Back)=(0,0,0) Caps=VideoProcess_YUV2RGB VideoProcess_StretchX VideoProcess_StretchY DeinterlaceTech_BOBVerticalStretch 
                   {6CB69578-7617-4637-91E5-1C02DB810285}: Format(In/Out)=(YV12,0x3231564e) Frames(Prev/Fwd/Back)=(0,0,0) Caps=VideoProcess_YUV2RGB VideoProcess_StretchX VideoProcess_StretchY DeinterlaceTech_PixelAdaptive 
                   {335AA36E-7884-43A4-9C91-7F87FAF3E37E}: Format(In/Out)=(YV12,0x3231564e) Frames(Prev/Fwd/Back)=(0,0,0) Caps=VideoProcess_YUV2RGB VideoProcess_StretchX VideoProcess_StretchY DeinterlaceTech_BOBVerticalStretch 
                   {6CB69578-7617-4637-91E5-1C02DB810285}: Format(In/Out)=(NV12,0x3231564e) Frames(Prev/Fwd/Back)=(0,0,0) Caps=VideoProcess_YUV2RGB VideoProcess_StretchX VideoProcess_StretchY DeinterlaceTech_PixelAdaptive 
                   {335AA36E-7884-43A4-9C91-7F87FAF3E37E}: Format(In/Out)=(NV12,0x3231564e) Frames(Prev/Fwd/Back)=(0,0,0) Caps=VideoProcess_YUV2RGB VideoProcess_StretchX VideoProcess_StretchY DeinterlaceTech_BOBVerticalStretch 
         Registry: OK
     DDraw Status: Enabled
       D3D Status: Enabled
       AGP Status: Enabled
DDraw Test Result: Not run
 D3D7 Test Result: Not run
 D3D8 Test Result: Not run
 D3D9 Test Result: Not run