Serial - Send data to Arduino while Arduino sending data
Following up on what Nick Gammon says, don't try to use the serial output to debug serial.  Perhaps try using the built-in LED instead; you can use an oscilloscope to find out how much time it is spending reading characters.

The following is how I've been reading a line at a time using non-blocking operations:

const int SERIAL_BUFFER_LENGTH = 100;

// The +1 assures we'll always have room for null termination
char g_serial_buffer[SERIAL_BUFFER_LENGTH+1];
int g_char_count;         // index into serial buffer

void setup() {
  Serial.begin(9600);  // or 115200 if your host supports it
  pinMode(LED_BUILTIN, OUTPUT);
  digitalWrite(LED_BUILTIN, LOW);
  g_char_count = 0;
}

void loop() {
  while(Serial.available() &gt; 0) {
    digitalWrite(LED_BUILTIN, HIGH);
    char c = Serial.read();   // won't block because Serial.available() &gt; 0
    if (c == '\n') {
      g_serial_buffer[g_char_count] = '\0';  // null terminate
      process_buffer(g_serial_buffer);
      g_char_count = 0;
    } else if (g_char_count &lt; SERIAL_BUFFER_LENGTH) {
      g_serial_buffer[g_char_count++] = c;
    }
  }
  digitalWrite(LED_BUILTIN, LOW);
  Serial.print(".");
}

// process_buffer: do whatever it is you intended to do with a 
// line of received text...
void process_buffer(char *buffer) {
}