I don't think that it is the KB904942. You say that you have done a Disk Check and a Disk Defragment, which I assume was via the XP instructions. If so, I cannot see that effecting much.
You could try the following.
1) Do a CHKDSK Check > Click on MY COMPUTER- Right Click on "C" drive - Select Properties - Click "Tools" tab - Select "Error Checking" and tick box - Shutdown then Restart computer, and let it check for errors on your drive.
2) Download and install RegscrubXP, CCleaner. When installed, run them and see what they find.
CCleaner click here (I need to look-up RegScrub link)
3) Have you any anti-spy, firewall, anti-virus programs installed, if, what are they?.