From Microsoft Knowledge base
The system performance is slow after you install Windows XP Service Pack 2 or upgrade to Windows XP with Service Pack 2
the solutions are listed there as well.
SYMPTOMS
After you install Microsoft Windows XP Service Pack 2 (SP2) or upgrade to Windows XP with SP2, you experience slow computer performance. For example, you experience the following symptoms: •If you browse the Internet, the performance is slow.•If you try to download newsgroup e-mail messages, some or all of the messages are not downloaded.•
There is excessive hard disk activity.•Overall system performance is very slow.
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CAUSE
This issue occurs if one of the following conditions is true: •You have spyware or malware running on the computer.•You have viruses that are running on the computer.•You do not have sufficient free space on the hard disk.•You do not have sufficient random access memory (RAM) installed on the computer.•You have corrupted or outdated drivers.•You have too many files in the Recycle Bin or temporary folders.