I logged in again this morning to see if it was any better on "off" times. Maybe a tiny little bit better. I was able to shoot Cherry once and then run away before dying.
It seems that the lag is triggered by combat with certain mobs. I can kill the dog creatures nearby without lagging out completely. It's still awful, but only about 2-3 seconds of lag. By that I mean...I shoot them once, it freezes for 2-3 seconds, then I shoot them again, freeze for 2-3 seconds, shoot them again, dead. For a newly released game when the admins are still trying to get a grip on network load, I can understand this.
But with Cherry, I shoot once and everything freezes for like 15-20 seconds. At first I thought that the more commands I input, the longer it lags out. But after testing it totally lags out regardless of whether I click one button or mash the keys. Unfortunately I am down to <10 HP potions now
With this in mind I tried turning off all my GUI notifications (damage numbers, HP numbers, etc) but noticed no improvement.
I fired up Resource Monitor and saw one SB.exe with a ~250ms latency; another with a ~70ms latency. I tried pinging each of their IPs but it always fails. I assume the game servers do not respond to ICMP.
Any more suggestions?