Personally I believe the install Windows every year is also a myth, but also like Piru, I tend not to install anything I don't know or need.
Yeah, I agree that reinstalling Windows every year is a complete myth. My current build of XP is 3.5 years old (C:\Windows\ folder was created January 22, 2004) and this system is nearly as crisp as it was when I first installed it.
And, to be honest, I beat the snot out of this system. It's a workstation that sees some work. I haven't been kind to this Windows build, by any means. I've installed, un-installed, tested, forgotten, so much stuff on here, it's crazy. As a platform, it still runs well, though. My 3D Mark benches are still within a couple percent of my baseline figures back when I had a clean install.
And to be honest, most of that change has been due to driver updates and revisions, more than anything else. I always benchmark before and after installing driver updates, and those cause a bigger difference than the difference between the last "applied driver update" test and the new "before driver update" test, which would be several months to a year later.
Now, what are some things I'd check out? First off, as rightly suggested, examine the hardware. Is anything overheating? (Chipset, CPU, Gfx cards, etc.?) Heat will cause errors, and errors slow down systems.
Also, somewhat under hardware, I'd update the BIOS and clear all your CMOS settings to default and then go back and enable the proper speedups. It sounds like a really strange step, but I've seen newer drivers have problems on older BIOS revs. Also, those CMOS settings can really goof things up if one very hot summer day your BIOS decided you needed to have your RAM timings adjusted, etc... Clear CMOS, Update BIOS, Clear CMOS again, let it auto-detect, and then make any final adjustments you want.
Also, under external hardware... If you don't already have one, go get yourself an external firewall. Make sure sure it's set to NAT and to disallow all incoming connections. (And, for god's sake, don't just get one and then put your computer in the DMZ. You may laugh, but you'd be amazed how often I see this...) Lock the firewall down, then open up the few incoming ports you need for whatever games/P2P stuff you use. Make sure all other incoming is blocked. And by all means, never ever allow incoming on the 135-139 MS RPC and file/print sharing ports.... EVER! Do this, even if you choose to run a software firewall. Why? Simple. Software firewalls 1) don't always work, and 2) take up many valuable CPU cycles handling the useless crap that comes down the wire to your machine. If you eliminate the useless crap upstream of your box, your CPU doesn't have to receive the packet, decode it, compare it to the ruleset, etc.
Next -- drivers! Get yourself the newest reference drivers possible for your system. Now, Dells have started sucking in this regard, as the last few I worked on weren't real happy with a couple of the reference drivers, . But install as many things with reference (manufacturer [ex. nVidia, Intel, ATi]) drivers as possible. Only use the OEM drivers [Dell, Gateway]) as a last resort. They're usually older, contain more bugs, and contain all kinds of crap you don't want, anyhow.
Next -- DirectX! Download the latest version from microsoft.com and install it. Even if you're already on DirectX 9.0c, do it. There are like 5 different 9.0c revs out there, and who knows what the heck all the bugs are between them. The only way I know of to define "current" is to use the one Microsoft gives ya today.
Next... What IS using the CPU and resources, anyhow? Use the computer like normal, only just leave it running for a couple days straight. Don't reboot it, don't shut it down. After a day or two, check the task manager and sort by "CPU Time". Check out what the top few offenders are, and make sure they're stuff you need. (System Idle Process, System, and explorer.exe you need. ;-) ) Also, as stated, probably around 30-35 active processes is the "sweet spot". Much more than that, and you need to trim some crap, because it'll start taking a serious hit on your performance. I know you can trim down to that level, too. Because I currently have 32 processes, and have AVG AntiVirus fully protected, my PocketPC Sync tray, my Motorola mobile phone tools, Daemon Tools, ClamTray, uTorrent, Firefox, Sun JavaVM, etc, all running... Like I've said, I'm not kind to this system... I USE it. A LOT.
If AV software, firewalls, etc are consuming too many resources, you might want to consider a different vendor for those. Personally, I don't use a software firewall at all, and use AVG Free for Virus Protection and ClamWin for virus scans of everything I download/test.
What I DO try to do, though, is keep all the spyware, crapware, and viruses off the system. Run the active AV software. Browse with Firefox. Don't load too much garbage from download.com and things like that. If you need a utility, try to go with the GPL alternative. Search SourceForge and the like. You're a lot less likely to get a download stuffed with 18,000 "helpful" toolbars and assistants...
DEFINITELY DON'T LOAD TOO MANY MEDIA CODECS AND DECODERS!! Those MegaCodec packs you find online... AVOID THEM! Only get CODECS for stuff you actually use, and make sure you download them from the original author's site. There are lots of infected/corrupt/obsolete/poorly coded CODECS out there. And Windows will fall flat on its face because of them. Sometimes to the point that the only way to clean the system does become a complete re-install.
Good lord... What a lengthy response. I should probably write a book on this or something. :-P
