May some extra info from Windows XP InsideOut can help:
Advanced System Tweaks
A handful of advanced features in Windows XP allow you to tune performance settings to match your computing needs. In some cases, these options happen automatically, and knowing how to tune them can be useful.
Multiple instances of Svchost.exe appear in Task Manager.
That's perfectly normal. Service Host (Svchost.exe) is a core piece of Windows XP code that collects a number of lower-level system-critical services and runs them in a common environment. By gathering multiple functions together, this arrangement reduces boot time and system overhead and eliminates the need to run dozens of separate low-level services. Because different groups of services have different requirements in terms of system access and security, Windows XP creates a number of different groups. If you're running Windows XP Home Edition, you should see four instances of Svchost.exe; Windows XP Professional uses four or five.
Several interesting ways to adjust performance characteristics appear when you open System in Control Panel, click the Advanced tab, click Settings in the Performance section, and then select the Advanced tab. In the resulting Performance Options dialog box, shown in Figure 7-13, the two top options let you tune CPU and memory usage.
Figure 7-13. By default, the two options highlighted here are optimized to help you run programs most effectively under Windows XP.
In the Processor Scheduling section, Programs is selected by default. If you multitask heavily and you're willing to sacrifice some zip in foreground program execution in exchange for faster background processing, select the Background Services option.
In the Memory Usage section, you can also shift the default settings, which are optimized for running programs. Choosing the System Cache option reserves a much larger percentage of available physical memory for use in the cache. This option is most useful if you use extremely data-intensive applications, such as video editing programs or large databases.
To improve the speed of starting applications, Windows XP continually monitors files that are used when the computer starts and when you start applications. It then creates an index (in the %SystemRoot%\Prefetch folder) that lists segments of frequently used programs and the order they're loaded in. This prefetching process improves performance by allowing the operating system to quickly grab program files.
The prefetching code is even more effective when used in conjunction with the built-in defragmenting tool. Every three days, during idle times, this utility rearranges program code, moving it to the outside of the disk to make it more efficient when loading. To force Windows to perform this optimization without having to do a full defragmentation, use the Defrag.exe command with the -b switch. For instance: defrag c: -b.
This command forces the command-line version of Defrag.exe to run, optimizing boot files and applications while leaving the rest of the drive undisturbed.
