The modem visibly out-performs the router every time. Guess what? I've hooked up my 5 year old WRT-54G router and it performs on par with my modem.
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There IS a clear problem with Xbox live connectivity and latency. You may not notice it as much in games such as COD because of the lag compensation filter and the fact that because the game plays a lot different than a skill based shooter such as Halo. I am a Halo player. The router is the only variable in this equation. If I use my old router or go directly through the modem, the lag issues are non-existent. There is no arguing this.
Another issue with xbox live and this router - if you're using a computer at the same time that you're on xbox live and you decide to shut off your computer, it will kick you off of xbox live.
I've contacted Asus wireless support both on the telephone and online. They get the same complaint all the time about there being latency issues with xbox live. I wish people would stop acting like the problem doesn't exist.
As you have since found out, it was an issue with uPnP and related settings. Perhaps you might benefit from copying my settings?
I also play Halo, Quake, Quake 3, and F.E.A.R. - which are all very sensitive to lag. I have no problems at all.
However, I do have uPnP enabled, so it may a combination of settings that lead to some kind of lag-creating bug. I maintain that "bufferbloat" is a nonsense term.
My settings for your interest:
LAN - Static IPs for fixed devices, like desktop PCs and the router etc. DHCP with dynamic IPs for mobile devices. No static routes, no IPTV setup. Switch packetstorm control all set to the default 10Mbps, with "NAT accelerator" enabled.
WAN - Dynamic IP, uPnP enabled, manual DNS servers, no authentication. No port triggers, 2 port forwarding entries (I sometime run a Halo and Quake server from home), no DMZ, DDNS using asuscomm, all NAT passthrough entries for VPN enabled.
Wireless - 2.4 and 5GHz enabled. WPS disabled. Bridge enabled (links to a Tenda AP), no MAC filtering, no RADIUS settings, radio always on, no AP isolation, IGMP snooping is disabled, multicast rate is disabled, preamble is auto, default RTS, DTIM and beacon settings, TX bursting, packet aggr, WMM APSD and DLS enabled.
IPv6 - disabled
Firewall - enabled with DoS protection, no logged packets and respond to ping enabled. No URL or keyword filters, no network services filters.
Traffic Manager - QoS enabled in automatic mode with upload and download bandwidth specified manually (3Mbps and 62Mbps).
Media server is installed and running from a USB stick. iTunes and DLNA enabled.
Firmware: 3.0.0.4.334 - installed without wiping NVRAM, but I did reset all settings after install and manually set the router up from defaults.
Clearly, you have an issue with the RT-N56U, as the linksys doesn't give you trouble. You either have a faulty N56, or something about your settings is causing a problem - as you now know, disabling uPnP seems to fix it.