How do I watch or stream movies over WiFi without constant stuttering?

You could try using VLC to do streaming, that might cope better

Windows file sharing has an incredible amount of overhead. I'd recommend using a protocol that uses less such as HTTP. I set up an apache server to just serve my video files. You can then copy the url from your browser into VLC. I was using this on my 802.11B network years ago and was able to get a much better speed.

You can also increase the buffer size in VLC. It will cause a small delay when you first start playing the video, but it should reduce the stutter.

Set up a decent Media Streaming application. XBMC edition is easy to use and buffers decently! Have UPNP on your router turned on!

Just as another datapoint: I don't have any problems watching 1Mbit/s video over 802.11g from an NFS mount using the "totem" video player (Debian/Lenny). No "streaming" software involved. I suspect totem is sensible about buffering ahead though (network bandwidth monitor shows none of the bursty bandwidth behaviour you describe).