Just in case anyone else is having this kind of issue:
I was able to determine that the hosting enviromnent was running VMWare workstation which was contributing to the CPU spikes (possilby through mis-management of process prioritisation).
It has since been replaced with VMWare ESX bare metal and the spikes have gone away. So have the symptoms that were manifesting in LFS.
Actually, I was just investigating that side of it. And It looks like there is a reoccurring cpu spike that coincides with the in game warping...
I'm going to try and locate the process that is causing it...
Hopefully I can stop it and that will fix the problem...
I just tried 3 and it got worse. Also tried 6 but no real improvement.
I doubt it is a connectivity issue as the hosting setup is pretty solid. And Teamspeak works perfectly (btw: we are not running that at the moment becuase we thought it may have been part of the issue)
Also if it were a connectivity issue, I would have thought that would make the time between updates slower or less consistent which would make the other cars appear to jump around a bit more.
But I don't understand why that would make your local view warp around?
Edit: just connect to mondaynightracing.com 2 do a lap and have a look at what happens...
Matrox Parhelia is the only video card that natively support 3 heads and / or report 1 drawing area to DirectX, but unfortunately it is oldish card. Probably will work fine (as stated earlier in this post), but no high resolution and no AA.So the only real altertative if you really want to go immersive, is to get a massive screen (24"+) and then run a SLI system for better performance to taste / budget. Oh and sit really close to it...