Is my hard drive to blame for slowness?

Your hard drive performance report indicates that something else is slowing you down. You should try Systech's recommendation, but first I would run something like spybot to look for malware / adware. It is easy and common to get bogged down with many unwanted internet programs without knowing and they slow your computer by trying to communicate with where ever they phone home to. Thus the communication is the bottleneck and you won't see your CPU maxed out. After removing any malware / spyware you find or verifying you don't have any, defrag your hard drive and carefully clean your registry.

Try turning off your Windows page file. It increases the response time of my laptop over 10,000%. You might think I'm joking but when I have to wait many minutes for my laptop to respond with the page file on, verses barely a second with the page file off, it makes such a difference.

"Is there a way I can test my hard
drive to see if its performing where
it should be?

Run HD Tune and then check the result browser to compare with other drives of the same make and model. The program also provides health and error checks.

To avoid as much interference from running programs/processes, run the benchmark test in safe mode.

HD Tune is freeware and portable (doesn't require installation).

However, the performance of hard drives doesn't really deteriorate in a physical way, they either work or they don't, there isn't much in-between. The reasons for your problems are most likely to be found elsewhere (e.g. fragmentation). You should also free up some disk space on the C: drive, 10-15% free disk space is recommended for system drives on windows based systems. You can also defragment your pagefile.sys with PageDefrag:

PageDefrag uses advanced techniques to
provide you what commercial
defragmenters cannot: the ability for
you to see how fragmented your paging
files and Registry hives are, and to
defragment them.

PageDefrag is freeware and portable (doesn't require installation)."

"CAUTION!

Your Disk might have the first read-block problems. When a disk block can not be read the first time, the system retries and that takes longer. This is a first sign of an older disk starting to lose blocks. It might even be starting to realign the defect blocks already, and this slows down the system as well.

BE VERY CAREFUL to do anything WITHOUT A BACKUP first!

My advice:

Buy a new disk soon, as yours is probably 4-5 years old.
Download Seagate SeaTools from the Seagate website and run it to test for bad blocks - if you don't believe me.

I already had to repair a few PCs that started ""degrading performance"" and ended with file systems full of bad, unreadable blocks."