Sounds like your PC rather than your internet connection. If it was your internet, then the computer would still be responsive, programs would open and close quickly, the mouse pointer wouldn't freeze, etc etc.
What would happen if it was just your internet would be that stuff you were downloding would take longer. Websites would open more slowly (note - not your browser, just the content), filesharing would take longer, youtube would stutter, and so on.
One thing I would add to the list of things you've already tried is a free download called Codestuff Starter - this lets you prevent all the old rubbish you don't need starting up in the background and hogging your processing power. Just make sure you know what you are disabling and that you definitely don't need it running all the time.