I bet you've got this dreaded "unrecognized AC adapter" problem. The computer can't detect the type of adapter you're using, and throttles everything down such that it doesn't overload some cheap third-party thing it thinks you might be using. When you pull out the adapter, it switches to battery power, and since it thinks the battery is good, it'll run at full speed again.
Check in BIOS to see if your AC adapter is recognized.
OK i found a temporary fix so that I could have my laptop connected to a power source.
basically I need to move the ac adapter into the back of the laptop so that it is BARELY plugged it (it will easily fall out if you touch it) but so that the laptop still recognizes itself as being connected to a power source but says "not charging"
Could be a number of problems... you've already eliminated any question of a power supply issue, so it must be an issue with the laptop. Based on what you're saying about moving the adapter around, you might just have a bad jack. If you're solder savvy, that should be simple to fix, but if not, it might cost just as much to have a shop replace the jack than to buy a new motherboard.
EDIT: Come to think of it, are you still under warranty?
You should just call up Dell and have them replace your motherboard then. Tell them you've got this problem and that you've confirmed that the issue isn't with the power brick. They should give you a new board without too much hassle.
I have the exact same problem, but my Latitude D620 is out of warranty. I have installed RMClock, but I am not sure how to set the throttling at 100%. Can anyone explain to me how to do this? I am running Windows 7