I understand your logic, I just think that there is no harm in setting it to max since your swap file will not grow beyond your initial minimum unless you run out of ram...setting a max at the available space just tells windows, hey, take what you want and give it back to me when you don't need it anymore. Windows 2000 and XP are far more intelligent about pagefile optimization.
Anyway, since the pagefile does not appear to be the problem, how about a runaway cache? Since someone tweaked the pagefile, perhaps they dredged up those old system.ini file settings, so let's go there next
Start > run
cut and paste it here.
and btw, how much ram do you have?