One of my friend runs nearly full settings on his computer. He has...

Similar motherboard to me (mine is actually better).
4GB of Ram
Nvidia 8800GT Video Card
Vista Ultimate 64 bit.
WD Raptor 150gb 10K RPM.

We both have the same processor (E6600 overclocked to 3.0Ghz). It should also be noted that our Ram modules are of the same ratings (4-4-4-12 DDR2-800). We also have identical monitors so native resolution would be the same.

I have
2GB Ram
Nvidia 9800GTX+ Video Card
XP Pro 32 Bit
2 WD 7200RPM 160GB Drives in Raid 0

So other than Ram and maybe (far stretch) his HD, my computer is better than his in every way. And the ram discrepancy is more or less evened out by the XP vs Vista difference.

So how come he can run full settings with no lag and I lagged at full settings?

Lag is a connection problem and has nothing to do with your video card, RAM, CPU, or anything like that.

It wasn't lag. It was the computer...