Anthony,
At THIS late date, I'd have to say it's probably NOT Windows XP itself that's causing the problem. Windows XP, for what it's worth has had most of it's performance issues dealt with over the past 7 years since it's release.
More often than not, this sounds like it may be a virus or some other form of crapware that's infested your computer. From the symptoms you mentioned, it appears to be a classic case where a spambot or other bit of nastiness has found itself a home on your box and is busily spamming (more than likely copies of itself) to anyone and everyone it can.
It may be a good idea to run an online antivirus scan - such as the one from Trend Micro, Panda Antivirus and others. It can give you a second opinion and may be able to find something your regular antivirus scanner missed - unintentionally or otherwise.
However, on occasion, it could likewise be a legitimate program that's buggy and/or is malfunctioning somehow. As an example, Internet Explorer 7 has an issue with Flash 9 - specifically certain ads that seem to run up the memory and CPU cycles till it bombs.
The way to find out if this is the case would be to right-click on the Task bar, select Task Manager and click on the Process' tab. Click on the CPU column header twice and you should see the task(s) that take up the most CPU cycles. If your system is running well, the "System Idle Process" task should take up MOST of your CPU cycles - 90 to 99% depending on if you've got something running in the background - like antivirus software, etc... Take note of the process(es) that are taking up the clock cycles and see if there's an update or if there's a fix for the problem.
You may also want to consider running a decent antispyware tool such as Spybot Search and Destroy and AdAware to confirm you're free of other bits of nastiness. The worst your antispyware app should ever find would be any number of cookies in your IE temp directory. These are mostly harmless - except they report your browsing history to people who probably shouldn't have that kind of information.
As a last resort, if no other solution can be found, you may want to consider reloading the OS entirely. Before you do anything THIS drastic, be sure to back up your data files, pictures, music files, movies, etc... and make a note of the applications you've got installed. Take note of any you don't need and cross them off the list of things that need to be reinstalled. The fewer things you've got installed and running in the background, the better your system will run. Avoid unnecessary clutter - like Google Desktop, toolbars ESPECIALLY from less than credible sources! Some of these "toolbars" do precious little to enhance your browsing experience - and tend to clog IE's arteries with spyware.
Some resources that can help...
http://housecall.antivirus.com
www.pandasecurity.com