I have had Windows 7 Home Premium with all updates connected to an Xbox 360 MCE working flawlessly. I upgraded my router to a Netcomm nb6plus4wn (wireless-n), and got a matching usb dongle for my Win7 PC, and the Xbox is still wired directly to the router. When entering media centre on the xbox, once I start browsing files the system freezes for about 30-40 seconds, then exits, saying 'Connection Terminated'. General menu browsing is also slightly laggy. The MC network tuner shows a good connection. Separate wireless software indicates a 90% connection, at 270mbps. I have never seen the connection 'drop out'. Event viewer on the PC shows: "The Media Center Extender user was abruptly disconnected." with an Event ID 117 in the Media Centre Application log. I have tried deleting the MCE certificate (in Microsoft Management Console) and re-establishing the Extender; this seemed to help a little - I was able to enter a subfolder and see a list of files, but it froze when trying to open a file. I have also tried changing the wireless channels, turning off (potential) interference devices etc to no avail. When I plug the PC back into the router, it works quickly and smoothly again.

There are several things that could be happening right now, and it seems like your narrowing it down. Did you make sure not to turn on any additional firewalls? A sure connection is essential but not the only thing that could slow you down, like checking the Xbox for firmware upates and also screen savers, moving backgrounds themes and when your hard disk and pc go into sleep mode. I noticed that opening media center on my PC before using my Xbox MC also worked. The thing is MCE isn't perfect it breaks easy but once you've mastered it's little kinks it works beautifully

There are several things that could be happening right now, and it seems like your narrowing it down. Did you make sure not to turn on any additional firewalls. A sure connection is essential but not the only thing that could slow you down, like checking the Xbox for firmware upates and also screen savers and moving backgrounds themes. I noticed that opening media center on my PC before using my Xbox also worked. The thing is MCE isn't perfect it breaks easy but once youve mastered it's little kinks it works beautifully