I found the solution! I forgot to mention in the above post that I have a Gigabyte P55-UD3 motherboard. Turns out it was a BIOS issue with the 5xxx Radeon series. I flashed the BIOS and all my problems are gone now!
Thanks for all the help
I'm having the same problem, my laptop spec is - and I'm running Windows 7
Intel® Core 2 Duo Processor T8100 (2.1 GHz, 3 MB L2 Cache, 800 MHz FSB)
3072MB 667MHz Dual Channel DDR2 SDRAM (1x1024 + 1x2048 MB)
Internal Keyboard - English (QWERTY)
256 MB NVIDIA® GeForce 8600M GT (128 bit) Graphic Card
320GB (5400rpm) SATA Hard Drive
Anytime I run a Flash video, my machine comes to a grinding halt.....help please!