By c2duo7500 I take that to mean it's the T7500 processor here: http://ark.intel.com/products/29761/Intel-Core2-Duo-Processor-T7500-(4M-Cache-2_20-GHz-800-MHz-FSB) That's an old CPU but probably not your issue. One thing that strikes me as odd is that you said: Does that mean 8-seconds total or it's frozen for 8-seconds at a time? Here is your real problem: You are out of RAM and you are wasting RAM. What kind of video card do you have? If you are shoving 8GB of RAM into that machine I'd assume it's either a 512mb or 1GB video card. A 32-bit operating system has a 3.2gb kernel. (http://en.wikipedia.org/wiki/Kernel_(computing)) XP 32-bit can ONLY ADDRESS 3.2 gigabytes of RAM because of the limitation of the kernel. Furthermore hardware RAM is addressed and reserved prior to software or your motherboard's RAM (in the DIMMs) so that means if you have a fancy video card that has 1GB of onboard memory then that is addressed first by the kernel and reduces your whole system from 3.2GB of RAM down to 2.2GB of ram because your hardware (video card) supersedes and reserves the initial gigabyte. You have 8GB of RAM installed but your operating system and applications can physically only address 3.2GB (minus whatever your video card has onboard). Bottom line (and cliffs notes if you don't want to read above): You need a 64-bit operating system. Time to upgrade to Windows 7 x64.
As we are touching on this 3.2 issue: Can anybody remember the software switch in XP (or I think writing to/altering a text file) that increases the amount of RAM available to apps vs OS - I think default is something like 2GB to OS and 1 for apps - can change to 1 for OS 2 for apps I think, or maybe it just increased the RAM usage up to a max of 3.2.
I would suspect the virtual memory (paging) to do that ... Windows has the dumbest memory management ever, you can have any amount of RAM and use only 10% of it, still Windows will page to disk most of that. So if your trading platform is actually using a large amount of memory, everything will be fine until all of a sudden it tries to use it all for whatever reason - then Windows pages back in all that memory from the HD, and it takes time. My suggestion: disable virtual memory. Yes, it means you will be limited to whatever RAM Windows can use, but you won't have those real-time performance issues.
Even switching over to "system managed size" from a custom or pre-set size will help. Some applications, like a lot of Java extensions in a few trading platforms, are coded to only access memory directly. OP could have processes running that appear to freeze because they are stuck waiting for the paging to stop so they can get the memory they need. End of extended support for XP is April 8, 2014. XP is now three OS generations old. It's getting to be time. (Vista, 7 and now 8)