You do not need a new router, whoever told you that needs to be fired. Worst case you need to reset it to factory defaults to undo whatever nonsense they had to do to your router that has caused it to act up.
If you are playing on the same network you shouldn't even need to forward ports, that is only for external traffic coming in. All you should have to do is run the server on one machine, figure out what it's internal IP address (probably 192.168.1.xxx, go to command prompt and type ipconfig) and connect to that IP address on the other computer.
Obviously you both need to have your own accounts to be able to authenticate against the Minecraft.net servers first, but running on a LAN shouldn't need anything done to your router.
I had the same thing happen when I messed with the #D settings of my video card, I changed it off 'Let the application decide' to something else and saw these lines. I changed it back and it was fixed.
Its not atrocious, you've got enough RAM really, but odds are the video card just isn't up to the task. The problem with laptops is other than the RAM and hard drive, you really can't upgrade anything.
Resetting the router is not going to reset the username/password, that requires a restore to factory settings which shouldn't really be necessary. If you don't know the username/password figure out who does and get them to login. Odds are your router is at 192.168.1.1, try opening that address in your browser. You're going to want to Google port forwarding, hell find a video on youTube, it's going to be a lot easier if you can see an example.
You either have horrendous latency or packet loss. I think there are network monitoring applications you can run that might tell you which one it is but I don't have a lot of experience in that area. I guess the first step would be to ping the server and see what kind of response times you get.
Windows key + R
cmd
ping xxx.xxx.xxx.xxx <- IP address of the server
It will ping the server a few times and then give you a summary. Tell us what the average ms value is, my guess is that it is not going to be good.
Send him the whole world folder. Zip it up and email it to him or put it on a flash drive or something, and he'll extract it into the same folder as his minecraft_server.jar and he can let his computer run day and night to host the server.
Without knowing the specs of the laptop its hard to say. Assuming you don't have other applications running it's most likely not enough RAM or a weak video card. Unless you have new laptop it's probably a weak video card. Despite its simple appearance Minecraft needs a halfway decent video card.
Anyone can host a server. I imagine it is possible for you to send your friend the world folder from your server and he can take over hosting it from that point on.
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Are you using the same burned ISO each time? Could be a bad burn.
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If you are playing on the same network you shouldn't even need to forward ports, that is only for external traffic coming in. All you should have to do is run the server on one machine, figure out what it's internal IP address (probably 192.168.1.xxx, go to command prompt and type ipconfig) and connect to that IP address on the other computer.
Obviously you both need to have your own accounts to be able to authenticate against the Minecraft.net servers first, but running on a LAN shouldn't need anything done to your router.
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I did, and saw something very similar to what you have there. I also noticed that torches had a thin white wireframe around them.
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Minecraft updater should really be checking this, I think this has to account for 80% of people crashing.
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Windows key + R
cmd
ping xxx.xxx.xxx.xxx <- IP address of the server
It will ping the server a few times and then give you a summary. Tell us what the average ms value is, my guess is that it is not going to be good.
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Is this in Singleplayer, Multiplayer, both?
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http://www.minecraftforum.net/viewtopic.php?p=2348442
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