Need more info for full answer
If your game (client) is playing on the same machine as the server , unfortunatley you are going to get some lag on your side no matter what, depending on the size of your machine and the resources allocated will depend how much.
if your not playing right on the server and it's a decent size 1 gig or better with 512 RAM u should be able to handle at least 20 clients ok, but if their all in the same system dogfighting each other u might have some issues unless you have a larger machine,
I'd recomend going into your advanced settings in your system properties and lockng your virtual memory at 2048 MB
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