This a common problem in Windows XP that makes network browsing very slow.
If the 'My Network Places' folder contains a shortcut to a network share, then each refresh of the explorer window will attempt to read icon information from every file in the remote location, causing the system to slow to a crawl.
Removing all shortcuts from 'My Network Places' will return the system response to normal.
You can prevent the automatic addition of shortcuts by setting
HKCU\Software\Microsoft\Windows\CurrentVersion\Policies\Explorer\NoRecentDocsNetHood to 1
Also check out this check out microsoft's knowledge base article 841978 The Explorer.exe process stops responding when you use network shortcuts in Windows XP
To work around this problem, create and use network shortcuts outside My Network Places.