1. XP or Vista? I know virtually nothing about Vista and certainly not enough to help via a forum. I'll assume XP for now.
2. The second connection 'for sharing the internet connection on my other computer' is on an internal network, with it's own ip addresses? The DHCP and DNS settings on that network are what?
Is a private network that i share with my other computer, just to give it internet access. DHCP and DNS for private network are set on auto (I've ran the Windows network setup wizard on both for sharing the connection)
3. The 'internet' connection, that slows the web site when active, has DHCP enabled, including DNS servers?
The connection is manually configured with IP adress provided by the service provider and it also has DNS servers.
4. How does browsing to external, www sites perform?
Well, that depends on many variables (day, hour, etc) but usually is kinda' slow (not dial-up slow, but slow enough). I think that the speed of localhost has something to do with the speed of the internet connection. When the internet connection is slow (badly) the localhost is slower than "normal" (where "normal" = slow
5. Your [Start / Settings / Control Panel] Internet Options (Properties) / Connections / LAN Settings has the 'Automatically detect settings' UN-ticked?
All check boxes are unchecked.