Welcome to the community. After reading your post I suggest you to run diagnostics on the hard drive & memory.
Please click on the below link or copy and paste it manually on the browser address bar & download the diagnostics software. Run tests on the hard drive & memory modules.
Please reply back with the result.
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I tried to install Windows 7 Home Premium (32 Bit) on my DELL DIMENSION 8400 with a 2.8GHZ processor and 4G RAM and had the following problems:
1) Installing MS Office 2010 Pro hangs 3/4 of the way thru and used 100% CPU.
2) Disk Defrag shows 100% CPU and didn't complete over night.
3) I can see files on my other Desktop thru a mapped drive, but can't get to the internet in IE 8. It says the NIC card is working properly.
4) AVG 2011 hangs on install 3/4 way thru; didn't try AVG2012 yet.
5) No sound on Harmon/Kordan Speakers--will have to find drivers.
I Used easy transfer wizard and moved back all that information for 4 accounts with no problem.
I ran the compatibility check and the only thing to be concerned about was, Outlook Express.