It is more likely that the safesearch and/or linkscanner features in AVG 8.0 is the culprit rather than XPSP3.
Try uninstalling or disabling these features.
You can get the method from the
AVG website FAQ 1254,1253 and 1338 or for a more comprehensive toning down of AVG, try the instructions in the
Tweakguides tweaking Companion.
What type of hard drive does your laptop have?
It wouldn't be a netbook with an SSD would it?