The wireless router/modem is right next to a wall & in the direction of the other pc, so thats not good then.
I have no idea if im getting interferance from neighboring waps, how would i know?
In the options under "Mode" i see 54g auto, 54g performance, 54g LRS, 802.11b Only, options, which one is best, its on 54g auto at the moment.
Ok so 54g LRS (Limited Rate Support) is a compatibility mode for older 11b Wifi cards (so not needed). I would try 54g performance as well to see if your dongle supports that. It may be a channel bonding option and if so that would probably only work with a Sagem Wifi card/USB stick.
Microwave signals, in the 2.4Ghz, band experience a big drop when hitting solid walls face on (the thicker they are the worse the effect) - entering a wall via a side and travelling right down a wall or obstruction will kill the signal dead!! Thes effect are very difficult to predict using more than rules of thumb (due to reflections, etc.) - it gets down to complex wave theory I'm afraid!!
But to keep things simple how many wall (faces) does the router wifi signal have to travel through to reach the other side of the house? Do you get any signal strength at all at this point? What is the rate? You should also test the wifi dongle after each intervening wall to see what the existing coverage of the WAP is like. If it is still active one room (/wall) away from the intended usage point then you are potentially in business... Otherwise you would probably need a better WAP.
If you are able to get a longer modem lead for the Sagem router... It would then be worth getting someone to monitor your laptop Wifi connection signal strength (at the other end of the house where you intend to use it) while you move the router around the room where the phone line is terminated (also changing the WAPs orientation in space can help). This will allow you to test for the best position for the router in the room.
To test for interference from 2.4Ghz devices you simply look for open WAP SSIDs (that your neighbours are running) or sniff for closed ones (more advanced). You can also try turning off any DECT phones you have - which operate in the same frequency band.
Unfortunately (from my experience) Cat5e cable will always give a better signal than any WAP!! It also has the added benefit that you not bathing yourself in additional microwave radiation at close quarters (disclaimer: this radiation is at such a low-level such as not to be harmful - why do my laptop instructions say to stay at least 20-30cm away from the dipole Wifi aerials in the back of it!!)
A Sagem branded router will undoutly work best with a Sagem branded USB stick or PC/Express-carrd!!
If you get really desperate you can pull your Sky assigned ADSL(2+) username + password (if they haven't told you these) off the router and use your own router - I gather... Also Sky might swap the Sagem model for a Netgear one if you hassle them!!
Bob