> ... then why would a client connected to the first wds repeater test at 1?
There is also signal strength to consider. It's possible they are not actually connecting at full speed to begin with, so when you cut it in half because of the repeater hop, it's even slower. It's especially noticable at the first hop. Concentrate on improving the wireless from the router with the internet connection... you should be able to get a lot closer to the wired speed of 25Mbps. If you turn off the repeater and connect from where the repeater is with your wireless computer, what speeds does it get? If there's not much signal to repeat, the repeater won't be as effective, so it may be better to move the repeater a little closer to the router with the internet connection.
The theoretical max of a 54Mbps wireless connection is a little over 27Mbps (because of timing and TCP overhead issues), assuming there are no 802.11b devices slowing down everyone (an 11b device will cut 11g devices on the same channel and SSID to about 13Mbps maximum). Peruse
http://www.oreillynet.com/lpt/a/4085 to see the math.
If you're in an urban or semi-urban area, have you checked with Network Stumbler for nearby competing networks on or within 5 channels of the channel you're using? You should stick to channels 1, 6 and/or 11. Anything within 5 channels using a different SSID can cause interference with your network (also microwaves, cordless phones, et al can cause iinterference).
Network Stumbler is at
http://www.netstumbler.com/downloads/InSSIDer reportedly works better with vista and win7 -
http://www.metageek.net/products/inssiderBoth of those are free.
Turn your wireless router and repeater right off, then check with one of those programs for other nearby wireless networks. (if the nearby network has its SSID broadcast turned off, the windows View Available Wireless Networks dialog won't display them, but those programs will.)