Steve, I believe you were right about the TCP Chimney Off Loading...
Before Installing IIS 7 and after installing the correct "Vista (WinServer 2008) Driver"...

After Installing IIS 7 - along with installing the correct "Vista (WinServer 2008) Driver" version for the nic card and making sure that both configuration per TCP Chimney Offload was enabled on the network adapter and per Windows 2008 server configurations, the results are alot better.
I believe the Nic driver which was installed when we installed the windows server out of the box and this is just a typical driver per any nic card.
This may have been the cause from the get go, but; making sure that the TCP Chimney Offload was either enabled or disabled on both adapter and Wins 2008 server acording to the document you sent me has made a huge difference.

Out Nic is: Vista (WinServer 2008) Driver 6.217 2009/3/31 - Realtek RTL8169/8110 Family PCI GBE NIC
steve schofield:As for why the results were different before and after installing IIS 7, I am totally clueless. I am smiling now :)
I really appreciate your insite, you've given us the solution to our problem.
Thanks again Steve...
- Flash
-------------------
Sounds like the TCP Chimney off-loading is enabled.
http://support.microsoft.com/kb/951037
This is new to w2k8 / vista. I've seen sprodiac things where disabling these settings