For watching DVD's or playing fast-paced games I agree, the network bandwidth isn't high enough to sustain the frame rates. As an experiment I tried playing an avi file on my remote machine. The highest resolution I could play without dropping frames was 640 by 480. Although at this size the network throughput was only about 25Mbps, so I wonder is some of the problem may be caused by the wimpy 4meg PCI graphics card in that remote machine. I might try to set it up in reverse, using that machine as the local and my more powerful box as the remote, to see if that makes a difference. I'll be able to attempt to play DVD's that way too.
But for programs like Photoshop, this system seems to work pretty well.
I installed Photoshop 7 on the remote machine. (Which is a PIII 866 with a gig of RAM) Using it remotely from my machine worked surprising well. Not as smooth or responsive as my local machine (Which is an XP 1900+), but definetly usable. The performance actually reminded me alot of what it's like to run photoshop on the Mac's at school. Sluggish, but workable. (I hope that not too many mac users hang out in this forum
By using Taskmanager to compare what was going on in each machine I can definetly say that the application is NOT being run on the local machine, it is running only on the remote.
My current theory is that the performance is being limited either by the weak graphics hardware, or by the inherent latency in the network cards and router. I'm going to try the same experiment with a couple of my other machines that have different hardware to compare the results.
I'll let you know how that goes.