CS3 PhotoShop thrashing

First my configuration information: P4, 2Gb memory, 120Gb hard drive (50+GB free), 4Gb pagefile.sys.

I installed latest trial version of PhotoShop EE and loved it. I created a large graphic for a trade show banner and everything worked just fine. The trail time was winding down so I ordered CS3 to upgrade all my applications.

Now when I launch PS and open this graphic my machine is so sluggish that it is virtually unusable. After program says "reading photoshop format" and the progress bar completes, screen refreshes and I see my graphic the hard drive light starts up. It will then spend the next 10 minutes on solid. Checking the Task Manager shows no applications doing and I/O (reads or writes). It appears that all the I/O is the O/S paging things to the swap file. If I’m patient and wait I will eventually get to where I can do editing. After a few edits, it begins again. Saving takes a long time. I didn’t see ANY of this when I was running the trial version on the same hardware. I’ve checked for virus, malware, adware, you name it. I have nearly 1Gb of free memory when all this is happening so it shouldn’t be a shortage of memory. I’m a 20+ year vetran and I’m stumped. Any suggestions would be greatly appreciated.