Okay. I can't make any assumptions about what's not in the provided config (regardless of what you said in the first post, I have to assume this is specifically the settings we are discussing), so first of all hop over to
CPU Management in the wiki for a CPU selection strategy for your .. i7? They're all fighting over all cores at the moment, and you can smooth it out by reducing the amount of fighting they are doing. The CPU Management page details the strategy you should probably be using and if you have questions about that, feel free -- just don't tell me you followed it if your main window is sharing cores with your other windows etc
Secondly the FPS limiting can probably be adjusted for additional smoothing, depending on if you find you need it at that point. You can drop the FPS in your dxNothing window to something pretty low (e.g. 10) and it won't affect the Video FX -- they will still be going at the same speed as before. Your foreground FPS can probably be dropped to 30 from 60, and you can probably drop background to 20. But again, only if needed.
If you try that, and swear it's not CPU, GPU or FPS related because all of your guys are getting 30 FPS steady, then that would really only leave networking, and ISBoxer isn't going to be affecting networking. In order for your guys to start or stop moving from auto-follow, they need to receive a message from the game server to do so. It would be super awesome if the game recognized other game instances on your PC and communicated between them in a P2P fashion, but sadly that's never going to happen
You might have 20mb of bandwidth, but that really doesn't say much about round-trip times between you and the game server, just that you could push or pull so much data compared to me with my 8mb down. If it takes a full second for the message that you stopped moving to get to the server because of network latency, it's going to take at least that plus the return time in order for your guys to stop moving. Your ping with the server is a good approximation of this. What is your ping?