Sounds like it could be a few possibilities.
From the description about the "circle that spins around behind the cursor" I'd assume you're running Vista, so how much RAM do you have? (Start -> Right-click Computer -> Properties or just Windows Key + Pause/Break on your keyboard) Should be listed under Installed memory (RAM): For Vista, you should be running at least 2GB for optimal performance, higher is almost always better.
If you are running 2+GB RAM, check how many processes are running (Right-click Taskbar -> Start Task Manager or Ctrl+Shift+Esc on your keyboard) and make sure that you either check "Show processes from all users" or click the button with similar text. Report that number here for us. One (or a few) of these processes could be causing issues and taking up more than its share of resources.
If that's not the culprit it could be an issue with your hard drive, though I'm guessing you have a SATA drive so it's not a software-related hard drive issue. Seems doubtful though.
To be honest, I'd have to guess it's the rogue process(es) option, which we can easily troubleshoot.