Why does internet traffic slow the rest of my PC down?

Ok, I am a somewhat experienced PC user, but I'm stumped. Whenever there is internet traffic, whether its torrents, web pages, etc, my computer slows down to a stutter. The mouse is choppy, music skips, the works. My question is...why? Here's what I've done so far:

1) spyware/adware/virus free

2) updated to lastest drivers for ethernet controller (intel pro/100 VE)

3) Background processes are bare minimum

My PC is more than capable to handle internet traffic. It is a P4 3ghz and 2gb ram. Ths thing is it used to be fine, with torrents running and 1/4 the ram I have now. What gives? Coud it be windows?

Why does internet traffic slow the rest of my PC down?downloads

I didn't knew that Internet traffic is handled by your PC!!!

Why does internet traffic slow the rest of my PC down?house call

- aside from the usual suspects: spyware, malware, viruses, worms, trojans

- could be bad ram. do a memtest.

- could be a heat problem. make sure the temperature of your system stays below 120 degrees F. make sure fans works.

- could be an electrical problem. can your power supply handle the load? With your recent upgrades and any other peripheral device like USB drives, ipods, cellphone docks and such, your power supply might not be able to handle the power load. or maybe it is getting faulty.