David,
I'm gong for the system performance stuff first because you mentioned everything was working fine before.
There's a bunch of things to check:
Anything else running at the same time like download managers, Windows updates, Adobe ARM, etc.?
I turn off my antivirus while using trainz. Some of the A/V programs have the ability to skip certain folder, or have setting that prevent them from analyzing every file that gets "touched" by a program. This a lone can kill a system.
Did you recently install Office 2007? This turns the stupid Windows Search and Indexing. This too can kill a system. I turn this off by default because I don't care to search for a Word document that is saved in my Documents folder.
How full is your drive? Windows needs space to swap stuff and so does Trainz. If there's little space, everything runs chunky.
Defrag? When did you last do this?
Clean up temp files, etc?
Check for malware? Run a full scan on your system. These little bugs will chunk a system too.
There are probably a lot more things, but this should give you a start. Let us know how you make out and we can help.
John