Lag issues, possibly due to update a few weeks ago?

I sounded the problem out as I was typing, so I guess it kind of turned into a book. Persevere and you will be rewarded! 1000 lumber!*

Description

A friend is having what I think are lag issues if anyone wants to help troubleshoot. I can’t swap any of his hardware with mine to test in the next week or so, so I’m hoping there is a fix I can walk him though over the phone or today’s update fixes it. It appears to be lag (as in bad latency), not low framerate (which a lot of people also call lag but I don’t think is accurate use of the term). According to him, after trying to move forward his character frequently remains stationary while the things around him like plants are still smoothly animated, he randomly gets slow to no response to mouse/keyboard input, lunges forward sometimes after a 1-2 sec delay, (I think he said he sometimes suddenly stops while running until he releases and then presses W again but I could be thinking of a similar issue I have on rare occasions), and so on. The problem clears up sometimes but not for long. I don’t see lag while playing on the same server at the same time he’s having a bad case of it so I don’t think it is server hardware or connection from the server to their isp. In fact, one of the servers we were on when it happened was running godly server hardware (according to the admin but I don’t think he was lying - I never saw performance issues that weren’t clearly my hardware’s fault and he was always right on top of updates and telling me about what he was upgrading when the server needed to come down for 5 minutes) capable of handling well over 100 players but tragically underpopulated. The lag issue my friend describes reminds me somewhat of rubber banding I guess, - or possibly a less severe post-patch form of it? He thinks it started right after an update, I believe 2 weeks ago (I also replaced his power supply around this time if I remember right and it could possibly be relevant - see 1 below). That patch might have been the one that made changes to networking but I could be off by a patch. He lives less than 50 miles away from me and has high speed cable internet (different provider than mine) and (other than our graphics cards) a somewhat better computer than I do, and I almost never see this kind of lag. He also isn’t using his connection for anything else while he plays and I stepped him through securing his wifi a month ago. We were both on a server in California the last time he noticed it, so I wasn’t substantially closer to the server than he was. Jumping to other servers didn’t help. The similar issue I have on rare occasions is when I’m in a large base with 8 furnaces crammed together in a small room smelting and spitting charcoal out into piles, packing it in between furnaces, pushing it through walls, etc., due to lack of space in the furnace to collect it. When that happens to me, turning the furnaces off and waiting for the loot bags to go away fixes it and it generally is ok to light them all again with no problems even after they accumulate just as badly as before. I had to install an add-on network card when I built his machine a few years ago because the on-board network adapter wouldn’t work or even light up despite trying just about everything (many people had similar issues with that motherboard and had to either install add-on network adapters or return the motherboard). Not sure if that’s relevant but there you go. Pretty sure I installed the latest drivers for it when I reinstalled windows 8 but we’re about to re-install them to be sure.

**My remaining guesses:

1**
I replaced his power supply and patched Rust around the time this lag problem started. Probably a week prior. I also cleaned the entire inside of the case and added a fan while troubleshooting the PSU failure. Rust ran smooth for me on it afterward but I didn’t test it very long. I don’t remember how much he played after I fixed that before the problems started but it wasn’t a lot. The PSU had to be replaced because it was one of those “bargain” units that grossly underperform/fail and his system was randomly restarting and getting worse as the PSU failed. I installed a spare I had laying around. Adequate power rating and certainly better than the last one on all but one of the rails, which was still close, but lacking (1) of the (2) 4-pin ATX12V molex plugs that the motherboard had sockets for. The form factor/revision number of the PSU met the requirements in the motherboard manual. Doing some research I found out that similar motherboards would run with one 4-pin ATX12V plugged in near the processor and the other (I think this one gives supplimental power, when needed, to add-on cards including graphics cards) could usually be omitted unless you were pulling a ton of power for video cards for gaming, which he is. I think the realistic worst-case was lock-ups, random restarts, etc., but it has been running fine other than this issue and turning graphics up doesn’t cause lock-ups, restarts, loss of video output to monitor, etc., so I almost want to say there is enough 12V to go around but I’m not sure. I’m considering the possibility that his video card is pulling too much power from the motherboard when the game is running and choking the network adapter. I checked to make sure and the video card doesn’t have a power socket on it. I would like to think the graphics card would downthrottle the framerate after too much voltage drop, hopefully before pulling the network card down but I have no idea. Probably depends on the voltage drop tolerance of the specific network card now that I think about it so I might have him watch his system tray for brief disconnects (if that would even cause the icon to change?). As far as any downthrottling (if graphics cards even do that…or does that only happen if the graphics processor gets too hot?), his framerate did drop by maybe 10% (now slightly below mine) after the PSU swap/Rust patch but a lot of people were losing performance after a patch, possibly the one in question.

2
Out of curiosity, could having enough processor/RAM but a really weak graphics card possibly cause this? I’m assuming it would just mean a lower framerate and not delay/ignore input but I don’t really know.

3
Another possibility comes to mind: we both have logitech wireless keyboard/mouse combos - different models but both 3-4 years old and almost the same price point. His batteries are indicating good (either the light on the mouse or in his system tray), which I know isn’t always reliable but I assume they would have died in the last 2 weeks if they were low enough to keep going but too high to be declared dead. I’d have him try new batteries anyway but he doesn’t have any spares atm (or any other devices with AAs in them which boggles my mind! How does that happen?!). A few years ago I had mouse interference issues for awhile (I think…but it might have been setpoint driver bugs) but not while playing a game. The cursor would jump to random corners of the screen for about 10 seconds but even when that issue was at its worst it would only happen a few times a day. I’m not sure if that would cause this issue in-game but I doubt it. I’m assuming as batteries start to die the wireless signal becomes more susceptible to interference, so he’ll be trying new batteries as soon as he can. I’ll also have him uninstall the logitech setpoint utility if it’s installed but I don’t think I put them on his machine. After reading so many complaints about setpoint causing issues and not being recently updated I stopped installing it on machines awhile ago.

He doesn’t have the money to upgrade hardware atm and I’m all out of spare parts so any guesses would be appreciated.

Specs
If I remember correctly, his specs are:

low-end i5 procesor but probably not quite the lowest one
8Gb ram
a PCI-e 8 or 16X add-on graphics card that boosted performance substantially over his on-board video, but ancient and only about $70 when it was new.

For comparison, My comp is slightly behind his in all regards except graphics card:
i3-2100@3.1GHz
4G ram
Radeon R7 200 series Display adapter (3 years old, something like $110-$150 new)

My hardware would probably get me trounced in most gun battles against equal skill but the game is otherwise playable on the second lowest setting (fast). Lately it’s 60, 70, sometimes 80 FPS unless I’m in a big base or otherwise pushing my hardware. On a side note, it consistently plays smoother/higher FPS on that setting than “fastest”. I always found that odd.

Both are running fully updated windows 8, all drivers are up to date (double checking his network and video drivers soon), and virus scanned using the integrated windows scanner (defender I think?) Additionally, I recently scanned his machine with a bootable flash drive with (bitdefender I think) on it and it was clean.
Neither machine has a solid state hard drive

Thanks!

(Yes I like to use parenthesis. Maybe more than I should. (Don’t worry, I can stop any time I want.))

*Lumber will be awarded until supplies run out or too many people miss their appointments and we become cross. On that note, no hippies. Don’t even try it. We know. Offer can not be combined with other offers. Our lawyers tell us it would cause an “offer jinx” and are just in general fed up with extreme couponers anyway. Offer double-void if you’ve ever raided a 1x1 but only single-void if you’ve ever failed to talk your hooligan friend out of raiding a 1x1 and yes, we keep a list of these kinds of people. It isn’t short. Thank Obama, the Patriot Act, and our healthy drone budget. Not redeemable for sulphur unless you’re Canadian. Canadians have more than enough lumber as it is and they certainly don’t go making bombs out of their sulphur unlike some people. Offer void if faking a Canadian accent. Lumber can not be transported more than 50 miles from point of delivery. If you really must know, it could potentially trigger a plague of emerald ash borer beetles that would kill off all the trees and fruit and then just to add insult to injury, leave most of the vegetables. (Ok…look, we’re willing to risk it and look the other way but all the lumber laundering will cost you 400 lumber and we reserve the right to narc you out immediately if we get pulled over). Offer not available to lumber police or lumber narcs. All lumber police will be reminded they are legally obligated to tell us they are in fact lumber police. New restrictions added daily. Don’t worry, you will be kept up to date via phone. If we can’t reach you by phone, one of our singing couriers will be dispatched to your workplace. All unclaimed lumber will be used to pay our disclaimer lawyers so if you don’t need it that badly, don’t get greedy and take it anyway. One slip of the pencil and you’re on the Hooligan List.

The wall of text is strong with this one.

I like to read - when there’s paragraphs.

Sorry :S

TL;DR Version:

Character responds slowly or not at all to keyboard/mouse input, often with a delay of a few seconds. FPS is fine the whole time.
Character sometimes stops running even though shift+w are still pressed and won’t move until they’re released and pressed again, which sometimes has to be repeated every few yards 3-4 times.

Possible causes?