Most media players do very little caching of 'local" material. VLC is no exception, but!!!! it will let you customize it!!!
Use advanced open and bump the caching from the default 300ms up to a thousand or two.
Also, remember that as it is DIVX, so you are working the processor hard at the same time. You can occasionally have process contention on the PC even on a dual core CPU. It also depends on the server latency.
All in all, you are looking at significant latency being introduced waiting for a physical drive on the other end of a network connection at the mercy of 2 network stacks running on 2 different processors and other contentions. 300ms goes away real fast... Streaming players know this and cache a lot... local players assume everything is local and fast which it often isn't.
Your network can likely easily handle the throughput, it is you player that is likely the issue. Everyone always wants to blame the hardware when it is often a software issue.
The fact that you could pull a 1.5 hour 700MB movie over in under 5 minutes says your network is at least 15 times faster than it needs to be to stream it!!!
There is a also a caching setting in preferences somewhere that might help.