Serial data capture unreliable

Hi Guys!
Been away from the office for weeks now, only just sitting back in front of my desk.
Update on the project, plugging the USB into the brand new computer purchased just to run the arduino. The problem is worse. Dramatically so.
Plugging it into a brand new computer with slightly different specs, ok but still some of the original problems.
In speaking to one of the Embedded lecturers at Canterbury University, his suggestion was, problems with Windows and its virtual serial buffer, and to run it on linux. Well that is completely out of the question. He also suggested some form of flow control.
But I dont really understand why it would need flow control, its basic information, the communication doesnt seem to have any bit level corruption and finally this is an arduino. They do communicate with windows computers everyday, if flow control was really needed this problem would have probably already been solved and/or well documented.

Sorry also meant to say, running with BETA IDE I can see I have used 41% of program mem which I already knew, and 35% of the dynamic memory if that helps anyone
Cheers for your help