Local Area Network : How to fix slow LAN transfer speed of files in Windows

Recently I had to solve a problem of a very slow transfer of files between two computers on a LAN network using Ethernet cable. Both machines had Windows 7 x64 installed and the transfer speed was ridiculously slow at 10-15kb/s. Using Task Manager under Networking tab, Network Utilization was showing only around 0.25% for Local Area Connection.

I looked around the web for solutions and found quite a few suggestions how to tackle this problem. Those that I tried and the one that finally solved my problem are discussed here.