I had one of those Netgear dongles and tried using it in exactly the same way as you - Netgear router downstairs and PC upstairs. I also had loads of problems which were not solved even when I contacted Netgear. In the end I replaced it with a (cheaper) Edimax one with a stubby aerial attached. This has worked flawlessly for 2 years and has a good signal.
Probably not what you wanted to hear but that's my experience.