PC hangs on ANY video playback

This started a couple of weeks ago: anytime I open any video file (avi, mpeg
etc) the system just hangs. This happens to ANY programme that needs to use
some form of video playback - using Windows Task Manager, I can see that the
programme is using abut 98% of resources and can only be stopped by forcing a
halt to that programme).
This can lock my system if its Windows Media Player, Internet Explorer,
Win-TV and even I-Tunes if the video window is accessible. My system even
hangs when trying to play those small news videos from the BBC News website!
I have reinstalled Windows XP (Pro) using a newly formatted disk and updated
with the latest from M'Soft.... still no change. I've tried to use the latest
video codecs - still no change. I've even tried turning off every programme
that I can, including virus software/spyware doctors etc., and thoroughly
scanned my disk for any virus, spyware etc (which shouldnt be there after a
full install minus the updates as I wasnt connected to the internet at that
point).
This is proving SO frustrating as I have no idea what to try next. Any
suggestions would be MOST welcome!!

Windows XP Pro with SP1 plus updates but not SP2 (I tried it with, but no
luck...)
1gig RAM
2 drives: 120Gb H/D for windows etc., 190Gb H/D for Data
Norton Systemworks