Thanks for the reply but I think I didn't give enough information... let me elaborate a bit more...
I've installed sp7 on the nw5.1 server during Easter holiday. Everything was fine until the recent sasser outbreak... which jammed the traffic for almost a day. After fixing the infected workstations, the network traffic started to deteriorate. At first, the login prompts of all Win'98 workstations in one of our labs did not show up... and now most of the XP workstations cannot get logon.
I notice that all the workstations that can get logon are connected directly to the switch that connects the servers. All other workstations (that cannot logon) are connected to a series of switches before reaching the server.
Jimmy