I turned my attention towards the Power connect switch. Everything is now working as it should.
Apparently my 1GB nic was not connected at 1GB. The ReadyNAS reported that it's transceiver speed was 1000MBps. So I connected to the switch, enabled Jumbo Frame support, I also enabled Jumbo frames on the ReadyNAS NV itself. Lo and Behold I can now copy the 35MB directory in under 10 seconds. Much better.
So to go back to my old configuration, I then took my XP machine, and plugged it into the little Linksys 10/100 switch which is connected to the power connect, and tried the same folder copy. It was fast, like it used to be.
I can't confirm with the other tech if jumbo frames were enabled prior to the RAIDiator upgrade, but apparently either enabling jumbo frames or rebooting the Powerconnect switch fixed my issue.