When I am casually surfing the web everything works normal on my internet (I have DSL), but as soon as I open up Transmission, my web browsing basically quits. I can go to almost no websites and if I do it takes an eternity, but as soon as I close Transmission the speeds go back to normal. Has anybody else had this problem?

Also, when I open transmission I only have 1 torrent downloading and the sum of all the traffic is about 10 kb/s

Your speed reduction shouldnt be that severe but remember BT uses alot of upstream Bandwidth - page requests cant get through.

Does it happen with any other torrent apps?

nothing for azureus

nope azureus doesn't affect anything at all

limit download and upload rate?

maybe this way it wont use some many bandwith