Firstly thank you sailorsat for the massive efforts to debug the emulator and try and troubleshoot the network component (if only someone had access to the source code ....) - also to the community for keeping this thread active for one of the best arcade games ever made.
Have recently setup another 2player Daytona emulation rig (with newer hardware ) and was really surprised to see how differently (ie worse) the network performed on the newer rig when compared to my older pair of laptops.
Just sharing my specs in case it helps anyone else debug their setup
Old pair
2 Cores, @2.26 GHz, Penryn (was master) win7
2 Cores, @1.66 GHz, Merom (was slave) winxp
2GB ram
Using a cross over cable , 100Mbit
Performed really with all the recommended settings (network sync =1 and not using the lagfix). No freezes/pauses, very minimal flickering (occasional after a few races.and not enough to spoil the fun)
The newer set of identical PCs how are a different story.
i5-3470. @3.6 GHz win7
Cross over cable, 1gb network (but not messed with jumbo frames)
The settings I carried over from the other setup resulted in the dreaded 1-2 pause people mention all over this thread but other than that the cars didn't flicker too much if at all - however the in game pause really killed the mood and seemed to happen randomly (not often but enough to make it annoying).
After turning off network sync(=0), and using the m2lagfix it was stable and removed the freezes but introduced a constant flickering of the other players car (seen from p1 and from p2). Still more playable.
I was going to investigate the differences in each pair further (thinking the slower PC for car 2 might have been a factor - was going to try adjusting the CPU speed of car 2 of the newer i5 ) but it looks that network throttle tool might just do the same sort of trick.
Curious as to what the original arcade cab video frame rate is...assuming it's close to 58-59 - hence the sweet spot for network performance?
I will test some of the new tools further and update with any feedback.