As Jeff says, the server should be doing the DNS and DHCP.

If you are running a Windows domain of 2000 or above then the server must be doing 
the DNS resolution.  That is why you have slow logons.

You can easily fix this by setting up DNS Server properly on the server (the Help 
on the server walks you through it) or by tinkering with your HOSTS files and adding 
the servers FQDN i.e. "192.168.1.1 myserver.mydomain.com " - the PC's are searching 
for a domain controller when they are sitting there doing nothing.

I couldn't say for certain if this is why they grind to a halt during the day, although 
you need to get DNS sorted before you worry about that.

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