The dropping happens when the computer isn\'t able to process all packets. This usually happens when it\'s either too slow or too loaded. Happened a real lot on my old PC.
This would suggest that there is indeed something that is eating up your performance. The lag doesn\'t seem to come from the DNS issues since that would result in buffer underruns rather than overruns, and also the resulting lag only affects what you see, not your own movement.
Thus, since it worked fine before, and there has bee no update recently, there must have been a change to your system that makes it perform badly. Maybe the drivers have become confused and aren\'t ebing used anymore, which would show in \"no hardware accelleration\" being displayed at the top of the splash screen for a while.
This sort of thing happened to me in Linux after PS crashed. A reboot was required to clear things, so maybe un / reinstall the graphics drivers and check if there is something hogging the CPU?