[RipperRoo]

your problem is one of distance (but i guess you worked that much out already) the maximum operational length of cat5 cable is aprox 100 meters (just over 300 feet) but at that length it takes a lot of power to send the signals back an forth, and it sounds like your router cant handle two cables of that lenght at the same time.
the way I would get round this problem, is to put another network card in machine B, and connect machine C into your network via this second card and a crossover cable
this way your only using one real long cable and not overtaxing your router as much.