Uninstalling SP2 has solved all my problems. I don't use PeopleSoft, but I'd recommend doing the same.
That would normally be a good idea, at least on my private computer with my own firewall, but and it's a big one, I work for a very large organization and due to the security issues that SP2 addresses (all the stuff that should have been addressed before XP ever came out) it's not the best solution, though at this point it might be the only solution. Peoplesoft doesn't seem to want to comply with SP2 for their present version because they have a massive upgrade coming out, later on, oh about half a year.