The online racing simulator
the whole game freezes.

Well.. I join a server, and spectate a car.. I see immediately that it moves jerky, but after maybe 10 seconds it suddenly says lag above the car and nothing moves, for 3-4 seconds.. Then it runs for 5 seconds and then again lag, until lag reaches maybe 7-8 seconds then it remains at that level.

If I join the game, I drive with good fps, but every 5 seconds everything freeze, network, movement, sounds, and then it drives again.

XP SP2, ATI x800XL latest compatible catalyst, AMD Athlon 3000, 2 GB RAM. Fairly dated computer, but as I said it ran fine with Demo and S2 for some days.
You need SP3 for XP.
Does your game lag in Singleplayer? Try putting 20 AI's and try it like that.
What is your connection speed? Go to some network speed checker site to get it.
of course I have SP3, my bad.

20 AI runs "fine".. a bit slow, but nothing like online lag.. online freezes happens even with 5 players.

Connection speed is 10 mbit and 1 mbit up, and it's verified by speed testing sites.

But hey, let's focus on the FAQ.. It seems the developers know about this problem.. Only problem is I can't update my Windows ACPI, but perhaps I can update my power management some other way? That's why I installed new processor drivers, because my CPU has "cool n quiet" technology.. It's supposed to switch down the CPU when not in use.. Perhaps LFS somehow instructs it to do that?
Why don't you turn that off? I have it turned off since the day one... If you want to control your CPU, get AMD Power Monitor (I think that's the name), it allows you to turn it down when idle (in fact, it does it itself) and also there is option to use the CPU always on max.
And your graphics card is a bit..............................old.
Also, what is your ping for the servers? Can you get us a screenshot of master server?
I don't think it has anything to do with the ACPI driver. I have never seen an app which would require updated ACPI driver to work properly and it actually doesn't make much sense anyway. Disabling Cool n' Quiet in BIOS is a good idea as I have always had problems with it.
There was a problem reported with LFS freezing completely caused by a system clock running too fast. Check how much time actually elapses when your PC clock shows that exactly 60 secs elapsed.
Regarding your internet connection, do you have a router or a cable modem? Is it connected to your PC via USB or RJ45 (LAN cable)? Fact that LFS freezes completely suggests that there is some more serious issue caused by improper SW or HW configuration, your internet connection itself shouldn't be a factor here.
Cool n Quiet is enabled in BIOS, but wasn't in use since Power Management was on "Home/Desktop" instead of "Minimal Power Management".

My ping to first 30 servers are 40-52

I have a router, connected with RJ-45

But MadCat. Maybe you are on to something. My system clock seemed to be in sync with my mobile phone clock when I watched for 3-4 minutes, but after 1 hour the PC clock was up to 10 seconds ahead.. But! I do sync with Internet Time Servers.. But then it shouldn't shift 10 seconds should it? Maybe it really does run ahead? If so, how do I fix it?

EDIT: I can see that last synchronization was 2 days ago. It only syncs once per week, so it's not due to sync. PC clock is 10 seconds faster in 1 hour. Don't know how dependent my mobile clock is though. It's a 5 year old PC, maybe clock battery is old?
Quote from g1bb0n :It's a 5 year old PC, maybe clock battery is old?

Could be it...
10 secs deviation every hour is somewhat more than I'd expect, but that makes it about 2.8 millisecond difference per second. I remember Scawen stating that LFS can handle clock desyncs up to 5 msec. It is also not uncommon for PC system clock to run at slightly variable speed. To sum it up, I think your problem is not system clock related.

Disable Cool n Quiet in BIOS, start windows in diagnostic mode (Winkey+R > msconfig > Select the "Diagnostic startup" button and reboot) and see if the problem persists.
Diagnostic mode, no network.
Safe mode, no graphics drivers.

Cool n Quiet off.
Fresh start, no virus scanner, no apps except LFS.. First round on the track ran ok, but then lags occured longer and longer until became unplayable.

I timed my PC clock more accurately now.. in 11 minutes it lost 10 seconds, not in 1 hour. So perhaps yesterday it lost 1 minute and 10 seconds..
EDIT: I have followed the clock some time.. and now it seems to be running correctly.. I can't figure out why sometimes it is unstable.

I also just played on 3 servers where everything was normal.. and the clock seems to be normal too now. Weird!
New discovery!

It's when I run LFS that my time runs like crazy!

When in windows a minute takes roughly a minute, but when I join a server, a minute takes about 45-50 secs! I can visually see the windows clock spinning faster.

So LFS must manipulate my clock somehow?
Quote from g1bb0n :New discovery!

It's when I run LFS that my time runs like crazy!

When in windows a minute takes roughly a minute, but when I join a server, a minute takes about 45-50 secs! I can visually see the windows clock spinning faster.

So LFS must manipulate my clock somehow?

WTF? Why don't you backup your skins, setups, dds's and reinstall LFS?
It could be some piece of hardware which is not in use unless LFS is running, such problem has been observed some time ago. Try disconnecting every non-essential piece of HW, play LFS on keyb/mouse and check if removing some HW solves the problem.

FGED GREDG RDFGDR GSFDG