Not using any dream, just having Deskscapes installed causes it.
I have Vista Ultimate, so I can still use Dreams with DreamScene. And I know certain dreams are somewhat CPU taxing. But not like the problem I have with Deskscapes 3.
I wanted to install Deskscapes 3 because it has more advanced features that DreamScene.
At first I wasn't sure what was causing it, so I installed MS Process Explorer to find out. PE said it was explorer.exe bogging down the CPU and that was because of an underlying .dll file: "deskscapes.dll"
I tried uninstalling and reinstalling Deskscapes, but had the same problem. It slowed the performance so much, I had no choice but to remove it.
Again, no real problem with DreamScene, just Deskscapes 3.0
Processor & Video Card:
PentiumD 3.0GHz
Nvidia 8600GT 512Mb