When Disk Copying VERY SLOW system performance - WHY?

My system is a P4 1.7GHZ, 800MB Ram, Windows XP.* I have two 7200RPM HDDs and just purchased a 320GB external HDD (USB2).* When copying files between internals drives or the external, the overall system performance plummets noticeably.* Device Manager reports the primary/secondary channels using Ultra DMA Mode 5.* Both internal drives are on the same primary channel (device 0 and device 1).* Perhaps this may slow down transfer speeds but wouldnt explain crappy system performance.

Is there anything i can do with my "current" system to improve operating system performance during file copying amongst my HDDs.

Thank you.