Though I have little expertise in that area, I doubt a video card setting will affect netlag.
Lets say we're in a situation where I'm the one pouring the lead into another player. It's on my computer that the hit detection is taking place. When you score a hit, your computer tells the server that you hit him and he has taken damage. That means that if I see the little sprites, I HAVE hit him. Some believe it's the other way around; you throw lead and the opponent's computer (or the server) tracks the hits. There was a game that did that, and HT laughs about how retarded an idea that was on the recordings of the last convention.
I don't see how a video setting will fix that, but I don't know exactly what vsync does either. My best guess is an unlucky hiccup in your connection where the smoothing code has set in and you're in th process of trying to start receiving and sending packets from/to the host again. The "I HIT YOU!!!" packets get lost in cyberspace and you get pissed.
P.S. I do agree that vsync should be on, however. I remember it helping something.