I have my problem resolved! It was caused by bad driver (sky2) for the marvell on board NIC, we need to use the driver for this NIC for it to work properly, as reported here:
https://bugs.launchpad.net/ubuntu/+s...20/+bug/104929
Here's exactly what I did that worked for me:
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* make a simlink in /usr/src from linux-headers- to linux (sudo ln -s /usr/src/linux-headers-`uname -r` /usr/src/linux). Not sure if this step is necesarry, but did it anyway.
* download the driver as described here:
https://bugs.launchpad.net/ubuntu/+s...20/+bug/104929
or go to the download page directly:
http://www.marvell.com/drivers/search.do
* Unpack the driver and change into that directory and run install.sh as root - at the prompt, enter option '1' = installation -> '2' = deactivate old module
* I am not sure if this only affected me, but I got an "(" unexpected error when executing install.sh. I have to change the first line of the script from #!/bin/sh to #!/bin/bash. Then it executed fine..
(I have kubuntu 7.0.4).
* Maybe it is a newer version driver that I downloaded, I don't have to manually remove the old module (sky2) and load (sk98lin), as described in many other threads. I just choose "2" = deactivate old module as described in the previous step, and it took care of everything.
* power down PC, remove power cord from PC, and discharge electricity by switching on PC with power cord remain disconnected. Reconnect power and boot up PC. I have no issue whatsoever with the on board NIC now with either kubuntu or XP. Tried downloading very large file in kubuntu, works perfect now


