W2K3 Server, slow LAN shared folder access

[Peter2cfu]

We have recently installed a 2TB NAS device for 700 users, and have two problems which we have worked around but would prefer to have a proper solution.

1) Seems windows XP has a 1TB Limit when is comes to saving files in LAN shared directory, seems when ever we go above 1TB per share windows will see and use it but cannot save to it “error: not sufficient space” or similar, very reminiscent of the old days when if you had more than 64MB RAM the old DOS programmes used to crash with insufficient memory.
2) Seems when a directory with more than 1500 files in the root, it takes a client machine between 10 to 30 seconds to show the directory contents.
a. I did a CPU load test on both the client and the NAS(W2K3 mass storage edition) on the NAS it never got above 2% and the client (XPSP2) the normal 4-12% range.
b. No network activity on the client end just the torch icon waving around for the duration.
c. I edited the registry to remove the scheduled task option. And made sure only the SMB Protocol was active, but no improvements.
d. On our older NAS Windows 2003 Server we do not have this problem.

Does anyone have any idea’s, this seems to be a Microsoft issue/limitation any fixes out their.