Linksys router - wireless problem

So, here's the story:
My fiance got a new laptop, currently I have:
My desktop (wired)
Xbox 360 (wired)
Second Desktop (Wireless)
Laptop (Wireless)

Linksys WRT110

The problem is, if both of the wireless computers are connected at once (AKA: ones on the...

internet then someone turns another on) the router straight up stops responding, thought it was weird so went through the usual...
Set static local IP's on all the comps, ranged apart a bit (101-190), that didn't work, so I reset the router to factory settings, the problem persists!

Now, at this point I'm thinking its the router itself that's causing the problem, but no signs of a problem come up at all when I look through configs and status reports.

To be frank, recently Linksys has sucked, used to be amazing.

Just wondering if anyone else has had this problem, and if so, how did you fix it?

I have had a similar problem in the past, and I fixed it by getting a new router.

I'm sure that's of no help to you, but in my case, it was a defective router.

How long have you had it? It sounds like you have a dying router, especially if it WAS amazing and is now giving you problems. That could also be why no problems come up when you're troubleshooting it and looking at the setup.

Do you have an encryption on your router? Access the linksys interface from one of the working computers. Usually this is done by going to http://192.168.1.1 (leave username blank, password is admin). Go to Wireless Wireless Security. Is encryption selected? If yes, get encryption key #1 and use it on the non-working laptop to connect to the router.