There are many permutations for setting to gain the 'best' for your setup. Some of which is due to simple PC maintenance, grossly overlooked by many users.
Here is only but a few:-
1) Defrag and run scandisc on your PC every week.
2) Turn off unused services.
3) Set realistic settings for your graphics card.
4) Update windows OS regularily (negating the download and install updates automatically, which it seems to do at the most inopertune moments).
5) Exclude certain folders from your anti-virus (that you trust).
6) Turn off any automatic scanners such as adware and set them to manual and use them regularily when you are not using the PC.
7) Check regularily for updated drivers for the MB, BIOS, Onboard Audio, Router/Modem etc..

Clear all unused programmes and 'devices' that you do not use and empty the recycling bin (before defrag).
9) Reboot your PC every 4 hours of use, to clear memory leaks.
10) Register SL as a trusted programme in your Firewall.
In SL:- (some settings to play with to gain a good balance to start from, increasing to gain a balanced playable system)
1) Draw distance = 96-128
2) Particles = 50-156
3) Composite layers = 2
4) Bandwidth = 2/3rd's of your own connection speed.
5) Disc Cache = the most you can allow (subject to how much physical HD space you have, although 500mb should be seen as a minimum).
6) Turn off = VBO, OpenGL, Local Lights, Bump Mapping and shiny.
7) If your version of the client allows, relocate the SL Cache to a different drive (not partition) to the one that holds your OS.

Clear the cache and cold reboot your system at least once a week (depending on useage).
9) Music bit rate = 32kbps
10) Remove all attachments/HUDS.
11) Fog Distance = 2.0
From these settings, assuming SL runs better, you can gradually turn up various settings to gain more 'eye candy'. Add attachments/HUDS one at a time to see which are the greatest lag causers.
This is only a small amount of what can be done to improve lag in SL, but it can be seen as a starting point.