Hi Bash, long time no see....good to see you're still around....was beginning to think you'd migrated to another planet or something.
Anyway...to your slowdown problem! The others are right in that you need more RAM to adequately run XP and 3rd party apps as well, so that would be a place to start. As Phoon suggested, it may also due to your video card, particularly if you're running WB5, which needs a decent and fairly up to date card to function properly...
However, it could also be due to your OS, depending on how long since it was first installed. XP and its registry can become bloated over time and thus will slow your PC down some. Defragging and cleaning out all the junk files can help, but sometimes that's not enough and you may need to freshen things up with a clean install.
Also, your 1.6Ghz CPU is relatively small compared to many modern ones, and being the central brain of your PC it will struggle when combined with less than ideal RAM and an inadequate video card, particularly when you're multi-tasking and have a lot of background processes running. Therefore, you need to optimise your PC by adding more RAM (perhaps a better video card) and cleaning the bloat from the OS, possibly via a clean install if your current installation is old. However, WB would not be the culprit slowing down your machine as it has a relatively small footprint and uses very few resources.
Anyway, Bash, all the best with it! I just couldn't imagine running XP without WindowBlinds anymore....it'd be like being relegated to Fisher Price after having Lego Technics for a while.