Issues with WRT54g V. 8 on Xbox Live.

Hey guys,
I'm having an issue with lag on xbox live.  My NAT type is set to open and I have my xbox DMZ as well as port forwarded.  There is no issue with joining games but I'm getting a lag anytime I play.  It's a short delay but when I throw a grenade or something of that sort it takes a second for the grenade to actually throw, and while that seems like a minor problem it makes all the difference in the games.  My last speed test showed 3 mbps down and 500 kbps up.  I've done as much research as possible and I'm sure the problem isn't with my ISP (time warner) but the issue lies somewhere in the router.  For whatever reason traffic is just getting hung up in the router and I CANNOT FIGURE IT OUT.  
I have a linksys WRT54G V.8 with the latest firmware.  Its running on Channel 11 and I have WPA2 AES security enabled.  My mtu is 1500 and I have Qos enabled for my xbox's mac address and while in games I show a 4 bar connection to the host pretty much at all times.  I'm stumped folks and any suggestions or even explanations would be greatly appreciate.

Open an Internet Explorer browser page on your wired computer(desktop).In the address bar type - 192.168.1.1 and press Enter...Leave Username blank & in Password use admin in lower case...
On the set-up tab change the MTU Size to 1365 and click Save Settings...
Click on "Administration" tab and disable the option UPnP and click Save Settings...
Click on "Applications and Gaming" tab and then click on "Port Range Forwarding" subtab...
1) On the first line in Application box type in ABC, in the start box type in 53 and End box type in 3074, leave the protocol as both and under ip address type in 192.168.1.20 and check the enable box, click Save Settings once done...
2) Once you return to the set up page click on the Security tab and uncheck Block Anonymous Internet Requests and click on Save Settings...
3) Click on set-up and change the MTU Size to 1452 and click Save Settings...Click on the Status tab and take note of DNS1 and DNS2 Addresses...
4) Goto the XBox Network Settings and IP Address Settings and select manual IP Settings and assign the following on your Xbox
IP Address :- 192.168.1.20, Subnet Mask :- 255.255.255.0, Default Gateway :- 192.168.1.1...
5) Also assign the DNS Addresses on the Xbox
Use DNS1 and DNS2 Addresses you took note off of the router status tab as Primary DNS & Secondary DNS for the xbox...
6) Turn off your modem, router, and Xbox...Wait for a minute...
7) Plug the modem power first, wait for another minute and plug the router power cable, wait another minute and turn on the Xbox and test it...it will connect...
** Also try to lowe down the security such as WPA,WEP(64-bit)

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