Fresh reboot, but still slow, internet runs at 4-5Kb/s where is the problem?

Thank you all in advance.

Here is my problem, well not exactly my problem, however it is a problem none the less.

A friend of mine has a 2Mbps fibre-optic internet connection with Telewest Blueyonder (Now VirginMedia). The connection is absolutely fabulous on his desktop PC, getting the FULL speed and a tiny bit more, using the default cable modem that came with the package, an WebSTAR by Scientific Atlanta, Inc. Connected to the PC using an RJ45 Ethernet cable.
Okay so wheres the problem?
The problem is not with the desktop PC, but with his laptop (and quite an old one at that, however the desktop PC is older so.)

To put it simply, he connected his laptop to the internet in exactly the same way as he did his desktop PC.

1.He used the installation CD given to him by Telewest (now Virgin Media, as I have already stated) to install the necessary components required to run the cable modem.

2.He connected the ethernet cable to the Laptop, and turned on the cable power.

3.Everything is working, the internet is accessible, using Fx to browse the web and everything.

The problem is that the internet is dead slow! When he downloads something, like say Firefox or Open Office from the official sites, what would be going at speeds of 200+Kb/s on his desktop PC goes at speeds of about 2-3 sometimes, if he is lucky, 10Kb/s on his laptop. Why is this?

Here are some questions you may ask so I have tried to give the answer in advance.

Does he connect both his PC and Laptop together with the same modem?
No he does not, mainly because he does not needed to, but more importantly because the modem was designed for one connection at a time, and as such there is only one ethernet port.

Has his laptop got any spyware, adware, jokeware, trojans, horeses and or viruses?
My guess is no. This is because we have run several anti-spyware, adware, and virus programs, (well only one anti-virus program). We used Spybot SD, Ad-aware 2007, Ewido (now AVG) anti-spyware, AVG anti-virus, and last but not least we ran and asked someone to analyze a HijackThis Log. After this surely the laptop is virtually free of any malicious software.
To add support to this statement, we even installed fresh copy of Microsoft Windows XP, completely wiping the hide disk and even changing the file system from FAT32 to NTFS.
Even after all this, we find there is a problem.

To make sure that it was not the connection causing the problem and the site we were downloading from. We check several websites and downloaded various stuff, and all downloaded fine on the desktop PC however on the laptop things were as slow as hell!

I not being an expert in this subject decided to post the problem up here at AfterDawn as such I am hoping you, the good people of AD, will be able to help me, God willing.

Before I finish I almost forgot!

The Laptop Specs;

RAM: 725Mhz, 256MB
Hard Disk: 10GB
Intel Pentium III (3)
Mobile CPU, 933MHz

OS: Windows XP Professional SP2.

Thank you all for reading, and a sincere thanks to all future helpers!

It's been a long time since I have back here at AD, but I am sure you can all help.

BluRay-

PS. Feel free to ask for more information.