CUDA slows down my computer

I use the Badaboom GPU video transcoder which uses nVidia's CUDA. When I use it on HD files, my computer becomes very low framerate. As I am typing these words, the letters are coming up slowly on the screen. My mouse framerate is much lower. But everything still works. I see that my CPU utilization is only 60%. It would be understandable if on Windows Vista this happened because it uses the GPU for Aero and the GPU is clogged up by the video transcoding. But since I'm using Windows XP, shouldn't the CPU have an extra 40% headroom to display my stuff faster?