This is a long shot, but seems to have had an effect for me with a different router behaving the same.
If you tick the 'Connect when not sending SSID', which should only affect hidden networks, see how it goes.
I am beginning to suspect that either the transmission of the SSID has short breaks for some technical reason, or external interference can be a factor.
If interference affects the data side of wifi you'll just get slow links, or lots of dropped packets. If the SSID doesn't transmit properly, the system may just put up the shutters.
If it works, see what performance you get. If it's okay but still not ideal, then look for the usual suspects: cordless phones, fluorescent lights, mains cables, etc.