Yeah, posted this problem in couple of hardware forums as the last resort.
I am repairing pcs since 2001 & this is the first time I've faced such a strange issue. All diagnosing tools are saying the drive is fine, alas its not.
Already checked drive controllers. Since you've mentioned it, I've also checked them now. All 3 hdds are in ultra dma mode 5. (except optical drives which are in dma mode 4).
What the more stranger thing is, some dos hdd tools are showing no read speed slowness. When I was checking for bad sectors with a dos utility (via bootable cd) , it completed the test with normal speed. (like 50mib/s or so)