Sounds definately like some spyware (or a virus) has got onto it and turned it into a 'Zombie' PC by hackers.
 
Run MSCONFIG and see what Startup items are loaded and then check them out with a Ant-spyware site eg.
http://www.spywareguide.com/product_list_full.php
 
Stop the bad processes via Task Manager and use an Antispyware program to remove them.
 

Do as peterh advises since it is the sagest course. You might think of running Hijackthis to help you run down the startups and processes going on in the background.
 
After having done that, and it still runs low, if those added devices are hung off of USB ports, don't be surprised that it runs like a kludge. USB ports and their devices do eat up processor cycles.

Thanks for the ideas!
I will be heading over to his dorm to try it out in a bit, when im finished i will post back with my results.

Here is my logfile from HiJackThis! Anyone see anything i can turn off or anything? I only know a little about this stuff. Thanks!
 
 
 
Scan saved at 2:23:52 PM, on 1/27/2006
Platform: Windows XP SP2 (WinNT 5.01.2600)
MSIE: Internet Explorer v6.00 SP2 (6.00.2900.2180)
 
Running processes:
C:\WINDOWS\System32\smss.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\services.exe
C:\WINDOWS\system32\lsass.exe
C:\WINDOWS\system32\Ati2evxx.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\System32\wltrysvc.exe
C:\WINDOWS\System32\bcmwltry.exe
C:\WINDOWS\system32\spoolsv.exe
C:\WINDOWS\system32\Ati2evxx.exe
C:\WINDOWS\Explorer.EXE
C:\Program Files\Apoint\Apoint.exe
C:\Program Files\McAfee.com\VSO\mcvsshld.exe
C:\Program Files\McAfee.com\VSO\oasclnt.exe
C:\PROGRA~1\mcafee.com\agent\mcagent.exe
C:\Program Files\Java\jre1.5.0_03\bin\jusched.exe
C:\Program Files\Creative\USB SBAudigy2 NX\DVDAudio\CTDVDDet.EXE
c:\progra~1\mcafee.com\vso\mcvsescn.exe
C:\Program Files\Creative\USB SBAudigy2 NX\Surround Mixer\CTSysVol.exe
C:\WINDOWS\system32\RunDll32.exe
C:\Program Files\Messenger\msmsgs.exe
C:\Program Files\Apoint\Apntex.exe
c:\progra~1\mcafee.com\vso\mcvsftsn.exe
C:\WINDOWS\system32\CTsvcCDA.exe
c:\program files\mcafee.com\agent\mcdetect.exe
c:\PROGRA~1\mcafee.com\vso\mcshield.exe
c:\PROGRA~1\mcafee.com\agent\mctskshd.exe
C:\Program Files\Internet Explorer\iexplore.exe
C:\DOCUME~1\JEFFCH~1\LOCALS~1\Temp\Temporary Directory 1 for hijackthis.zip\HijackThis.exe
 
O3 - Toolbar: McAfee VirusScan - {BA52B914-B692-46c4-B683-905236F6F655} - c:\progra~1\mcafee.com\vso\mcvsshl.dll
O4 - HKLM\..\Run: [Apoint] C:\Program Files\Apoint\Apoint.exe
O4 - HKLM\..\Run: [WordPerfect Office 1215] C:\Program Files\WordPerfect Office 12\Programs\Registration.exe /title="WordPerfect Office 12" /date=012906 serial=wa12wrx-0000002-hmd lang=EN
O4 - HKLM\..\Run: [MCUpdateExe] c:\PROGRA~1\mcafee.com\agent\mcupdate.exe
O4 - HKLM\..\Run: [VSOCheckTask] "C:\PROGRA~1\McAfee.com\VSO\mcmnhdlr.exe" /checktask
O4 - HKLM\..\Run: [VirusScan Online] C:\Program Files\McAfee.com\VSO\mcvsshld.exe
O4 - HKLM\..\Run: [OASClnt] C:\Program Files\McAfee.com\VSO\oasclnt.exe
O4 - HKLM\..\Run: [MCAgentExe] c:\PROGRA~1\mcafee.com\agent\mcagent.exe
O4 - HKLM\..\Run: [sunJavaUpdateSched] C:\Program Files\Java\jre1.5.0_03\bin\jusched.exe
O4 - HKLM\..\Run: [CTDVDDET] C:\Program Files\Creative\USB SBAudigy2 NX\DVDAudio\CTDVDDet.EXE
O4 - HKLM\..\Run: [CTSysVol] C:\Program Files\Creative\USB SBAudigy2 NX\Surround Mixer\CTSysVol.exe /r
O4 - HKLM\..\Run: [sbUsb AudCtrl] RunDll32 sbusbdll.dll,RCMonitor
O4 - HKLM\..\Run: [updReg] C:\WINDOWS\UpdReg.EXE
O4 - HKCU\..\Run: [MSMSGS] "C:\Program Files\Messenger\msmsgs.exe" /background
O9 - Extra button: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O9 - Extra 'Tools' menuitem: Windows Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O18 - Protocol: msnim - {828030A1-22C1-4009-854F-8E305202313F} - "C:\PROGRA~1\MSNMES~1\msgrapp.dll" (file missing)
O23 - Service: Ati HotKey Poller - ATI Technologies Inc. - C:\WINDOWS\system32\Ati2evxx.exe
O23 - Service: Creative Service for CDROM Access - Creative Technology Ltd - C:\WINDOWS\system32\CTsvcCDA.exe
O23 - Service: McAfee WSC Integration (McDetect.exe) - McAfee, Inc - c:\program files\mcafee.com\agent\mcdetect.exe
O23 - Service: McAfee.com McShield (McShield) - McAfee Inc. - c:\PROGRA~1\mcafee.com\vso\mcshield.exe
O23 - Service: McAfee Task Scheduler (McTskshd.exe) - McAfee, Inc - c:\PROGRA~1\mcafee.com\agent\mctskshd.exe
O23 - Service: McAfee SecurityCenter Update Manager (mcupdmgr.exe) - McAfee, Inc - C:\PROGRA~1\McAfee.com\Agent\mcupdmgr.exe
O23 - Service: Dell Wireless WLAN Tray Service (wltrysvc) - Unknown owner - C:\WINDOWS\System32\wltrysvc.exe

The majority of the things running are McAfee related followed by Creative Sound stuff a few ATI video things and a couple of wireless network things. I don't see anything that could be a virus or spyware. It should however tell you how much McAfee hogs computer cycles checking incoming and outgoing packets.
 
There are a few things you might try for example like defragging the hard drive (this, of course, is presuming his hard drive is not filled). Also, you could try to clean out all of the *.tmp files. Then, you could try some registry cleaning and compacting. One utility that does all of this is System Mechanic. It is free for about a month's use then you have to purchase it. But, just to satisfy yourself that you have done what you could do software wise, you could give it a try. Since it is a Dell, there should be some onboard diagnostics that you can access from the keyboard (unless they got erased when you re-installed XP). These diagnose the hardware and if there is something awry, they will give you a specific number that when you call Dell's support can tell them exactly what is the matter.

thanks guys,
running very well now. i used four or five spyware removal tools in safe mode and ran a virus scan and registry compacter and cleaner. seems to have fixed whatever was wrong! thanks alot guys!

Hello mate,
you can try that msconfig thing.
also you can disable everything on that except the antivirus and you'll be up and running.
also if you'de go to
c:\windows\prefetch
you'll see a lot of files there delete all of tyhem. it is a temp folder of windows so just delete all of them and do it regularly and just notice the performance difference.
also you said that you formatted the HDD make sure that you have not done a dirty installation other wise it might not work properly..
boot from the cd and you'll be running fine.
do that prefetch thing and it does work wonders
GOOD LUCK.

so after all of that, it runs very well for about 20 minutes and then goes way down hill again. do you think it could be a cooling issue? it is an xps laptop with a very hot running processor (Pentium 4 3.4 ghz)

Again, tool_462, it looks like you have diagnosed your problem adequately. Later Pentium processors throttle down when the system perceives that the processor is running too hot. Because it is a laptop, this is not something that you can really repair. Send it back to Dell to get it fixed.

Check that the air intakes are not clogged up with lint. I had the same problem, cleaned the path for fans to blow hot air out and it works like new!