Also check your Event Viewer for any disk errors while the slow down happens.

Any brand of real-time virus scanner can get locked up on a corrupted file which could cause the symptoms you describe.

Dave,
Roll back to a pre-update image.
You still running XP?
Auto Updates has hosed me more than once; too long a story.
Had a problem with MS SE on my Win7 desktop; again too long a story.
No problems on the DAW, but I don't let it "update".
Tom

XP. No realtime antivirus scans. No automatic updates. When I do update I always review everything that's going to be updated before allowing it. I obsessively scan event logs on a regular basis. This machine is very, very stable and clean.

Which is why I get pissed off whenever any software does things without my blessing, such as deciding on its own that I need some service that I don't want. This kind of MS arrogance is the main reason a dinosaur O/S like Linux still has a place in the world.

I completely get it Dave.
Reload the last image and rock on!
Did that on my desk top this morning...

Tom

bitflipper

MsMpEng.exe is a component of Microsoft Security Essentials, specifically the "real-time protection" piece. In the Services list, it's called "Microsoft Antimalware Service". You can either stop it from the Services applet or from the MSE settings (click on "Real-time protection" and uncheck the "Turn on real-time protection" option).

This is really good to know.  I just upgraded to a very powerful machine, so I haven't been bitten yet.  But on my previous XP machine, Alchemy (just as one example) would start dropping out like crazy and MsMpEng was always there consuming major cycles when the problem behavior was evident.
 
I'm still internet-connected a lot as I'm "moving in" to the new DAW, so I guess I'll leave it on for a while.  But the minute things settle down and I don't need that internet connection, read-time protection will be history.  Thanks for the tip.

A week now since I disabled this service, and I haven't had a single DAW session interrupted by sudden slowdowns, jerky response and dropouts.

I started having the same problem as everyone else recently.  MsMpEng was working away eating up resources.  Also, Microsoft Security kept telling me that I really needed to do a scan since I hadn't done one in a while.  Even though the screen showed I had performed a scan 4 hours earlier.
 
Uninstalled the program, cleaned the registry, downloaded and installed the latest version.  Now running quietly and normally.  Must have been corrupted.

OMG BitFlipper!!!!! i am so glad you figured this out! I can go back to work now... Thanks a TON!