It may be your RAM. If you're using Norton Anti Virus, delete it and go and buy another AV prog that doesn't hog resources as much. Delete your temporary internet files, cookies, and if you're using Windows XP, use the File Cleanup utility. Check background prodesses that you're running while playing DAOC. Close down the ones that aren't essential. Check the amount of virtual memory / paging file size. Decrease the amount of memory that the Recycle Bin takes up. Close down System Restore or reduce the amount of memory allocated to it.
Next, do a ping test from the command prompt and check that your getting your full package delivery and that there's nothing wrong with the service you're getting from your ISP.
Then do a complete virus scan and run some spyware removal programs.
Do a check to ensure your graphics card can handle the version of DAOC you're running (i.e. need 128MB card for the full suite of expansions and all the graphics FX). Make sure you're drivers are fully up to date.
If you're playing on a network, try disconnecting from the server and try playing on a stand alone PC.
You might be surprised how a little TLC every now and again on your PC will improve its performance.