Lag can be an incredibly annoying feature of second life and can really affect your enjoyment of the virtual world. What do we mean by lag? We'll I'm using the term a bit liberally to mean any kind of slowdown in the interface, or lack of responsiveness. For example, all of these symptoms could be classified as lag:
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Stuttering of the view as you rotate or move, or "freezing" altogether
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Your avatar (av) keeps moving or flying seemingly by itself when you want it to stop
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A long time between you selecting an action and you seeing the result of that, for example if there's a long delay between you clicking on the inventory button and the inventory window appearing
What causes this to happen? A number of things, including a lack of processing power, lack of available memory, underpowered graphics card, network load, Second Life server overload, etc. What this means is that there isn't really any one silver bullet that will cure all "lag" (strictly these conditions aren't all "lag" as such, but we'll continue to use the term to cover all of these symptoms for convenience).
However there are some simple things you can try in your Second Life preferences that I've found have greatly improved things for me. I'd like to thank my friend Yashoo91 Bade who walked me through these techniques. I can't guarantee that they'll work for you, but they are definitely worth a try.
So, bearing all that in mind, try the following:
Changing your Preferences
Start by selecting the "preferences" option from within Second Life
Network Settings
Next, select the "network" tab and change your max bandwidth to 500 and your disk cache to 50
Graphics Settings
On the "Graphics Settings" tab, change your draw distance to 64
Graphics Detail Settings
On the "Graphics Detail" tab, make sure your terrain detail is set to "low"
Adv Graphics Settings
Then, on the "Adv Graphics" tab, set your graphics card memory to 64MB, the fog distance ratio to 1.5, and the outfit composite limit to 3
Audio & Video Settings
Finally, on the "Audio & Video" tab, turn off the streaming music and video options
Finally
Finally, log out of Second Life then log back in. Now see if you have a better experience. If you do, you can try turning some of the options mentioned above back on one at a time to see what difference it makes (if anything). Or if you're happy with these settings anyway leave them as they are and getting back to enjoying Second Life.
Of course, if you find this hasn't helped you then unfortunately you're going to have to try other sources. This article from Linden Labs can be useful and is worth a try in those cases.
