Did you have anything running in the background that may have caused interference with the install? It could have been a file not copying over properly or something is not running well under SP2. You could try re-installing it again to see if the problem occurs again, you have already found that system restore works well afterwards
You could also check your task manager list when the system is slowed to a crawl to see what is taking all the CPU time up, I had issues with ZAP killing my CPU when I ran a variant of it, I had to use a different firewall in the end to get around the problem. It could be an application doing the same to your computer, you should also make sure you are trojan, spyware and virus free before installing to ensure that it isn't outside interference.
If you try another install of SP2 I would do it without anti-virus and firewall running, even if it means disconnecting the PC from the broadband connection while it occurs.