"Do you have a USB device connected (besides the keyboard/mouse)?
I experienced a similar problem to yours, but only if I connected a USB hard drive. The system would then go into a state that required a restart to get it out of. Even if the USB drive was unmounted the interrupt rate would still be high and the system was slow and not very responsive.
I tried all sorts of things, including removing the USB devices in the Device Manager and updating to the latest drivers. But nothing helped. In the end I bought a new computer as it was time to get a new one anyway. The USB drive was working perfectly on the new system so it was not the source of the problem.
I suspect it was either faulty hardware or a corrupted Windows installation.
In general I don't like to propose unspecific measures, but:
perhaps a first step could be to install Windows XP on a second empty hard disk and see if the problem goes away. If it does not then you can rule out a corrupted Windows installation or a corrupted file system (as it was installed on an empty harddisk).
Using this method you can return to your old Windows installation without the need to reinstall applications, etc. The second Windows installation can also be used as a backup installation if the first one fails - this can be very handy if you don't have time to fix the problem, but just want keep on working. (I also use it to switch back and forth between a 32 bit version and a 64 bit version of Windows - although a virtual machine would probably be more handy)."