Two router network speed advice please

[fromaron]

I have a strange problem with my home network setup.
I recently connected to ADSL2+ plan via Billion 7300 modem/router. The Billion has 4 ports router where I have two wired PCs and one PAP2 Linksys ATA connected. As I have one more port available I decided to connect second router with wireless - Linksys.
Initially I connected the second Linksys router to the first one via one of the linksys LAN ports. All other wireless PCs at home connected to it without problems. The only problem I had was wireless PCs had very slow download speed, compare to PCs connected to the first (main) Billion router.
I switched off firewall at the Linksys router just in case it affects the download speed, but I couldn't get any faster then 700kbits/sec using speedtest.net.
Please note wired PCs to Billion give me 16000 kbits/sec download speed.
I suspected that speed capping was due to the way I connected the second router using its LAN port.
Next thing I did, I re-configured the Linksys router such way that it had a static WAN IP address, I also created second IP network, by assigning different IP segment to Linksys (192.168.2.1). My first network has 192.168.1.1 address. Both routers have 255.255.255.0 mask.
Next I connected the second router using its WAN port (not LAN like before), reconfigured all my wireless devices to use new network and I got the download speed of 7000 kbits/sec. Well as all wireless PCs use 54g network I didn't have problem with the speed.
Then over suddenly after few hours I noticed the wireless PCs became a bit slow again. The test produced only 1000 kbits/sec.
I power cycled Linksys router few times, but I couldn't get any improvements there.
Can someone give me advice on what could be the problem here? I am pretty much out of ideas.

[fromaron]

Anyone?

[intelliGEORGE]

The first pragmatic solution is to buy a small switch and use that to connect the computers together and then use an uplink to the router to provide internet access. But that's a quick fix that doesn't solve the fundimental problem.

However, my main suspect would be the router itself. I'd take it back to the supplier and ask for a replacement. Considering the efforts you've gone to, I think you could well have a faulty unit.

If that doesn't work, I think it is time to get a packet sniffer on the case.

I had a similar problem with a Linksys "b" system. Internet was fine, but wireless file transfers across the network would run SLOW and finally fail.

Wired transfers were fine. I spent too much time with Linksys tech support ... nice guys, but they couldn't help. I went and bought a D-Link extreme g setup. Now everything works the way it is supposed to.

I know of two other guys (both computer professionals) who had similar problems with the Linksys wireless stuff and replaced it with another brand. No further problems.

I've used linksys for years, and was always happy until my wireless experience. BTW, the wireless worked ok for a while, so I presume it was some hardware problem.

[fromaron]

However, my main suspect would be the router itself. I'd take it back to the supplier and ask for a replacement. Considering the efforts you've gone to, I think you could well have a faulty unit.

Thank you intelliGEORGE. I was suspecting my Linksys was playing up, just couldn't believe it. My trust for Linksys was way too high I guess.
What you have confirmed is the fault like that can happen. I will probably get an AP (maybe TP-Link 108) and plug it in to my Billion, leaving only one network segment.
I can't take my Linksys back to supplier, it's long time out of warranty.