Could it be that you are currently using Internet Explorer version 7? Because YouTube has announced that they have stopped support for IE7 or lower recently and asked everyone to upgrade to the latest version... that could be the cause of your lagging with the buffer! =)
Right click video > settings > click on the folder > set local storage to unlimited. You can also pause the video and do something else for a few minutes. There's nothing much you can do about bad connection.
Try restarting your computer, then try watching the video again. If that doesn't help, try lowering the video quality (E.G. If you're watching in 720p, downgrade to 480p.) If that doesn't help, try clearing your history (careful with clearing the cache, you'll lose all flash game progress you may have.)
