Could it be anything to do with the "Find Fast" facility - or "Indexing Service" as its known in XP ?
Right click your C: Drive in My Computer and then click "Properties"
At the bottom of the window is a check box :
"Allow Indexing Service to Index this disc for fast file searching"
I have known this to slow things down - especially on larger drives - try unchecking it and see if things improve.
Coconutty