Ok, after about two weeks worth of use and work, here goes the write up of my Dual box setup for Lotro. To begin with I am currently playing a Champion and Minstrel Duo, which seems to be working pretty good.

Hardware Specs:
2 pc's:

My main Pc has the following:

Intel Core2Duo E8500 3.16Ghz O/Ced to 3.80Ghz
8 GB of ram
Gigabyte 9800GT with 1 GB Ram
1xWD Velociraptor (main drive)
2x WD Black Label 640gb drives
Windows Vista Home Premium 64-bit
Logitech G11 Keyboard and MX518 mouse

On the second Pc I have:

AMD 4400+ X2 2.2Ghz
2GB of ram
Asus 7300GT silent (256mb I think)
some crappy hard drives
Windows XP Home
A cheap Logitech Keyboard and Trackball

I have two 19" Asus LCD monitors attached to the main computer using the Digital cables. I have the right monitor attached to the second pc by the analog connector.
I change the option on the second monitor to go to the second pc when I am using it.

The two pc's are connected to a simple 10/100 5 port switch on my desk. The switch is attached to my WRT54G router, which is connected to my cable modem.

Software:

2x Copies of LOTRO (1 on each pc)
Logitech G-series Profiler (manages G keys on the keyboard, and macros 8o )
Logitech Set-point software for the mouse.
Hotkeynet (it's all over the forums) with a custom script file. This program rocks, many thanks to Freddie. (you da' man)