Is my machine bottlenecked?

There is no bottlenecking here.. You either have a mouse issue (hope you are not using a trackball mouse) or a display issue (problem with your monitor and/or your video card).. Make sure you are running the latest drivers for your video card.. I've no experience with a SCSI drive to state if that could be a problem.. Meanwhile, are you experiencing any heat up issues.? That is to say, do you get high fan noise suddenly while you attempt to draw something.?

Nope, i have my own custom fans set at my own speed and the temperatures for cpu and video card stay pretty cool. Im using a Gear Head "Performance laser" wireless mouse. Its strange, when i get on gta iv, in the menus, the mouse is slow at tracking as well, but during gameplay its fine. (as well as left 4 dead) Im just trying to figure out whats going on with it.

Photoshop is using half of my ram so i doubt ram would be an issue

Some cordless mice need to be close to the receivers or need pretty much line of sight even though they are not supposed to. Try another USB port closer to the mouse if you have one free. Does the mouse have software? Make sure it is updated if so.

Its Def. not my mouse, just used 2 dif. usb mouses and still mouse lag in photoshop.

Do you know the Response rate of your monitor, if not what is the monitors model?
In some monitors they can cause mouse lag and other lag, such as sluggishness when you are watching a movie. If you have another machine in the house pug it in to that and see if your getting lag as well.

mY Screen is a i-inc IF 281D

If it takes a second for the drawing to catch up, then you do a have a problem. Also technically, every machine has a bottleneck, theoretically its impossible to not have a bottleneck...Also, check your CPU usage when opening photoshop. Personally, sometimes I mess with images on Paint.Net (free) and when I apply effects like blurs, adjust light levels, color..etc. I can take a few seconds to render it in which time my CPU jumps to 100% usage on all 8 CORES on my i7 920. So maybe your CPU? Just check Task Mananger while using photoshop.

Not necessarily when im running photoshop, but anytime i goto draw or add/edit anythig in the canvas, it lags like hell, cpu shoots to 100%. Then again, it is only a dual core

Looks like you've figured it out by yourself.

I'll just add some points then: The program is resource hungry, So the dual core would most likely inadequate. moreover, I noticed you're using an 235"e" series. As I recall the "e" lineup is designed for lower power consumption, which inevitably will affect performance. Anyone correct me if I'm wrong. I'm all open for correction.  

Well darn, if i posted my Mobo, would you be able to help me find a suitable CPU for better performance? Sooner or later ill be able to actually build my pc, but for now ill just continue upgrading the one i have.

Just post your full specs like the mobo model number, amount and type of RAM, etc. as detailed as possible. We'll see what we can do to help...  

Yeah,if your CPU shoots to 100%, then it is most likely a bottleneck.

Mainboard Model MCP61PM-GM (0x000002A5 - 0x17F329C8)

I hope that wasnt too much, Mainboard Model MCP61PM-GM (0x000002A5 - 0x17F329C8)

Help?

That was a little much at first lol. Glad you fixed it. Here is what you are looking for.

http://support.gateway.com/s/MOTHERBD/Shared/4006254R/4...

K, so i should be looking for a AM2 Processor right? Does AM2+ make a difference?

Im looking at getting this, but im a little unsure as to what it means when it says the cpu has to be lower than 89 watts. I have a pretty good psu, or would this processor destroy my mobo?

http://www.newegg.com/Product/Product.aspx?Item=N82E168...

Looking at this post.. and what i got from it was that the mobo i have (which someone else in that thread had bought the same emachines pc) can handle up to 99 watts and a am3? Maybe needing a bios update? How can i tell if this is true before actually spending money on a quad core cpu?

Basically your motherboard can only support some older processors of Socket AM2. The AM3 has been the new standad since 2008 or so. 89 watts is a standard for those processors.
"Supports AMD® AM2 Socket K8 Athlon™ 64 X2, Athlon™ 64, Athlon™ FX, and Sempron™ processors under 89 watt power consumption" so no the processor you picked out will not work it's 125w.

I keep finding instances of people with the same computer as mine (OEM versions) that are upgrading the Power supplies too 800w and extreme video cards with some nice 99wat quad core processors. I think you are still looking at the gateway version of this mobo.