Why the lag in online servers?

[MaXMhZ]

Originally Posted by Black_Sage29

I usually play On LAN network settings since that's the fastest speed

I always thought setting it to ISDN would cause things to slow down

Nope. LAN setting in IL-2 means biggest packets, nothing else...

And when a packet gets lost (happens a lot), it needs to be re-send and re-checked.

Use 56k as already suggested. That will use the smallest packets. Use a wired connection. WiFi has a HUGE overhead bogging down your system even further.
You do need a far better computer with more RAM too. Your current computer probably has 100 Mb/s maximum Ethernet speed, to say nothing about the performance of the rest of the system. Ancient, maybe good for notepad, a bit of surfing (not even all sites will work), and the occational email.

When you say it runs IL-2 smooth, you probably mean on the absolute minimum settings?