Went through Red Pants HQ in Westland with my friend Beeze, and twice my client crashed. It also had intense lag in areas where NPC's are in massive hordes, and because of that lag, I had a delay for using all skills, couldn't target 50% of the time, and due to the lag from the hordes, I had a ton of bugs after death in which enemies would keep attacking me, forcing me to have to restart my client every time, OR rely on my friend to revive me and kill the nearby enemies. In the cases where I respawn from this, I immediately die again, do NOT warp to a Popo Stone, and all my gear durability hits 0. This is an issue for me as it now costs me over 100k Zeni to repair all my gear.
And it's not just here. Anywhere with massive clumps of NPC's or Players, such as major towns such as Korin Village or West City, and other mini dungeons such as Red Pants Training Area or Aria Waterfall, the lag due to clumps is enough to glitch you and cause bugs. Now, the players bit I doubt could be controlled, as they gather at the PvP arena in Korin Village and camp at the auction houses. But everywhere else, I believe lowering the NPC count would be enough to lessen the lag.
