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For short runs, 1G ethernet will run happily over Cat5 cable as along as it has all wires connected. It definitely works on Cat5e.
Ethernet not running at the rated speed is almost certainly a speed/duplex configuration error. The usual cause is one end being set to a fixed speed and duplex and the other to Auto. By IEEE specification the Auto end MUST fall back to 10Mb half duplex when it does not receive the negotiation signals.
Compare the settings on the two PCs and on the switch if it is configurable.
On the PCs look under "Configure"->"Advanced". They should both have the same settings for speed and duplex.
No matter what anyone says, DO NOT configure gigabit any other way than Auto. The IEEE definition says gigabit MUST autonegotiate. This is a battle I regularly have to fight at work.
For information, in 99.999% of non-gigabit cases ethernet should also be set to Auto.
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