No, its not defective. Its probably one of the best commercially available(and stock firmware) G router of all time. Its your configuration. You yourself said so. You reset to factory, no issue, that rules out hardware.
1. Make sure the Wireless Auto scan is enabled, G only, and then try the highest Super G mode your adapter is compatible with.
2. Make sure Automatic Upload is check for Gamefuel. What does the upload say there?
3. Try different Transmissions rates.
4. Last, try keeping everything else the same and just disable wireless. If that, and only that, is the only thing that makes it better, could be a compatibility issue, but its probably workable.