Could it just be that what you're doing is putting way too much strain on your system, causing it to lag to death?
Can you run Photoshop (Or some other photo-editing software other than paint, or maybe Flash or something... even Paint.net?)? I found Photoshop 5.0 was hard on my last system to the point of unresponsiveness. (Now though it's a bit better).
Did you install the latest videocard drivers (And clean the last ones)?
def not strain on system , if I start a game for example running no other applications at all - as soon as it comes to any 3d bit the whole pc freezes , another example is when i ran 3dmark03 it starts to render the first test then hangs on me ...