Since day one I have had an issue with XMBC on Windows where it would occasionally need to buffer videos. I thought it was network related but there is no bandwidth problem and changing network card didn’t help. There was no problem with CPU usage either. Most bizarrely the problem would go away if I altered the audio settings, e.g. by setting or clearing the “output stereo to all speakers” option. It didn’t matter what the actual settings were, they just had to be changed once per video. Even after starting and stopping the video it would stay fixed.
Today I switched from using the Radeon 3200 based on-board graphics to a discrete Radeon 5300 card and the problem seems to have gone. It must be something about the HDMI sound output or otherwise related to the card. Very odd.