The problem can be the result of almost anything . It can be the result of an over loaded or a badly fragmented hard disk, windows or driver corruption caused by malware, faulty hard disk, memory, motherboard, the lot.
It's true that the computer has limited resources but it should work better then in your description.
In addition to posting the minidump, as asked by bdesmond - mvp - , please take the following steps from which your computer can only benefit. This is more or less my standard procedure to speed-up computers.
1: Click Start > run. Type msconfig. Check Selective Mode and click the "startup" tab. Uncheck everything which is not essential. Leave only antimalware programs (if you change your mind latter you can reactivate those programs). Confirm and reboot. Upon rebooting a message will show up. Please check it and continue. For laptop users: do not uncheck items that clearly relate to the operation of the computer.
2: In Add/Remove programs, in Control Panel, uninstall all unnecessary toolbars such as Yahoo, google and others. Latter on you can download them again.
3: If you have Internet Explorer 7 installed as a windows update, uninstall it in add/remove programs in control panel. This will roll you back to internet explorer 6. Latter on you can download it again as a Windows Update.
4: Download and install CCleaner. Do not install the Yahoo toolbar that comes packed with the program. In addition to items checked by default please check "Old Prefetch Data". Run the "cleaner" and "registry" options a number of times until nothing is left to be cleaned. Use the backup option (in "registry") when prompted to do so.
5: Run a thorough scan with updated antimalware programs. Use the link in my list to the malware forum and follow all the preliminary steps. Run full system scans (all files), preferably in safe mode. Run the programs one at a time,
6: Run disk defragmantation. For this operation I use and recommend Auslogic Disk Defrag. Alternatively you can run Microsoft's defragmenter.
7: Download and run PageDefrag. This program defrags registry and page files which are not defragmented by other means. Set it to work upon next boot and reboot.
8: Download HD Tune and under Benchmarking run a complete performance test. Please report Average data transfer for the entire test.
9: Press ctr+alt+del to enter task manager. Under Performance tab look for "physical memory". Please report Total and Available.
10: Enter "My Computer", right-click drive C: and then Properties. Please report Capacity and Free Space of your hard disk (each partition, if you have more then one).
11: Go to Device Manager, expand IDE ATA/ATAPI Controllers, Double click IDE Primary Channel, click Advanced Settings and write down what you see in Current Transfer Mode. Repeat the procedure for Secondary IDE Channel.