Computer Locking up & Programmes not responding

Computer Locking Up & Programmes Not Responding

Can anybody please help?

My computer has decided to lock-up/run slow and programmes not to respond.
The only programmes that will run are Internet explorer and any small programme that doesn’t require too much memory i.e. Word. If I try to run Nero 8 all I get is the splash screen and then it dies, and 5 minutes later it loads in a not responding state.

At first I thought it might be a virus or malware, so it was scanned with 3 different virus checkers but none were found. Tried to do some house keeping i.e. defragging but it just locked-up. Tried System restore, it went through the motions but didn’t restore. The only way to do a system restore was to use the recovery disk and do a complete rebuild, but this still didn’t fix the problem. So more drastic action was applied, the hard drive was wiped with Derek’s Nuke & Boot (in case something was lurking in some un scanned part of the hard drive) but still no improvement.
The System was rebuilt and MS Up-dates installed up to SP3 and Net Frame Work 2 in order to run MS Fix It, but it still found nothing.
The system has now been down graded to SP2 (the bear minimum) because some suggested that one of MS up-grades might be causing the problem. But it still hasn’t improved.

So the following hardware tests were applied.
Hard Drive checked for bad segments none found
Check Disk ran and found to be OK
RAM checked with Windows Memory Diagnostic (2 passes found no errors.)

Computer Details:
Mother Board: ACP\PNP0C02\1
Processor: AMD Athlon (tm) XP2400+ (Speed Tested: 1990MHz) * ACPI\Authenticsmd__x86_Family_6_Model_8\_0
RAM: 1.5 GB
Hard Drive: 150GB

*Could a processor running at the correct speed still be failing? One test showed the Sustained Transfer Rate to be 304Mhz/s.

So can any one make a suggestion to what the problem might be, it would be greatly appreciated.