Thanks n0ahg - we've tried most of the troubleshooting steps from the FAQ:
- removed old Balance drivers
- installed 1.1.0 drivers
- disabled all non-relevant WIFI and wired networking drivers and other audio drivers
- examined the Windows Task Manager for any network, CPU, or disk spikes that correlate to when the dropouts occur.
We didn't explore the DPC Latency Checker yet, but we already kinda know what the results will be :-)
btw - it's a Win7 64bit OS, Acer, AMD Quad Core with 6Gb memory. Balance is connected to known USB 2.0 ports (no hub).