Incessant lagging while using VMWare Fusion [recent problem]

I've been using VMWare Fusion on my MBA 2010 13" since january without a problem, been able to run a virtual machine side by side with pretty much no performance impact on either system which is great. I was even able to emulate the Playstation 2 console within a virtual machine at a quite playable speed. Up until now.

While running the virtual machine the whole system lags to a halt, right now im typing and it takes another 2-6 seconds for the words to appear on the screen its absolutely unusable. I'm stumped because i haven't changed anything within windows which is whats on the virtual machine i even made a brand new installation. As var as i know i haven't changed the version of VMWare and i've been on 10.6.7 for a while without issues, plus recently restored my system.

So does anyone have any idea of what I can do to check /fix/investigate further to fix this issue? I should note i "felt" some sort of slower performance with the system but it might be my imagination. Also not to mention, this system is behaving like the cpu is being used at 100% its even faster than this when i'm converting videos which makes the fan whirl loudly, its not even on right now which puzzles me to what the issue is.

Thanks in advance,
Kris

 

vmx-server or something like that is using around 39-50%. Theres other apps using about 1-5% and some randomly jump up and down to about 30%.

Well, I was able to achieve PS2 emulation while giving the virtual machine 1 core to play with and only 760MB of RAM. I have a C2D 1.86 with 4GB RAM.

EDIT: I uploaded my usage via a picture of my activity monitor window.


EDIT2: Upon further investigation, it seems to occur when the graphics are being used. For example i tried parallels 6 and just the but when it shows the window with the name of the virtual machine and its moving around, caused the system to behave just as unresponsive and the VM was not even running! I'm now in the virtual machine and its working fine, as long as i don't have the GBA emulator opened. This is beginning to sound like an annoying hardware problem -_-