Setting COMnFIFO to 1 enables the FIFO buffer on your 16550 UART, but doesn't hurt even if you don't have a 16550. The COMnBuffer line specifies the number of characters that the device on the corresponding serial port will place in the buffer. The Windows default of 128 bytes is not optimum for high speed modems. Increasing the buffer to 1024 lets Windows process data in more efficient chunks. Check with your modem manufacturer for information on drivers.
Dropped connections can occur when there is a sharp decrease in line quality during a call.
V.34 modems will switch to rates as low as 4800 bps to compensate for these changes. If the loss of quality is extremely severe, they will drop the connection.