I was told that with 10.8.5 ML, certain Nvidia drivers get "broken" for a specific chipset, though I am not sure if this is related to your problem. It's the reason why I am still on 10.8.3. Try to go back to 10.8.3. I normally keep a clone of my previous OS HD so in case of problems after updates, it's easier to revert.
Aw, that's disappointing. Well, I don't have a back-up or anything. I don't think you can go back and install an earlier version of ML over a newer version of ML, without wiping everything. Maybe the only thing I can do is upgrade to Mavericks.
EDIT: So I decided to test Mavericks on the machine. The only other HD I had available was my Windows one, and Windows never takes priority - so I wiped it w/o a back-up ;-). I am using it as a test dummy for Mavericks, just to see how the system runs. Apparently there are issues with the 10.9.2 update, but maybe the version of SFOTT I downloaded has already figured that out. Gonna try the combo update on the test dummy and see what happens.
EDIT (again): So I ended up getting the latest version ever of Mavericks up and running on the machine. I found the SFOTT guide on re-patching the system (since update 10.9.2 reverses the patch that makes it bootable on 32-bit EFI Macs), which really helped.... However, Mavericks is acting worse, in terms of the problems that I had stated with Mtn. Lion. I know it sounds stupid, but in addition to slowdowns with loading applications, I have an issue with the following: Minecraft runs at a laggy 15 FPS (at the lowest), when it should be running at around 95 FPS at most. Apparently, many others have had this issue with Mavericks.
Amidst all of these issues, I've decided to roll back to Mtn. Lion. Hopefully none of its updates cause re-patching to be needed, but at least I know how to do so if need-be. Question - I am still afraid of the 10.8.5 update, but I want things to be as up-to-date as possible, without too many updates lingering from within the 'Updates' section of the App store. You said that you were safely on 10.8.3, but what about 10.8.4? Are there any known issues with it? I am just trying to proceed with caution, given that I've been through hell and back with this so far.
Edit: So I ended up rolling back to 10.8.3; I won't try 10.8.5, and not 10.8.4 until I hear back from you about ITS safety. Things are running okay; the largest limitation seems to be the hard drive or something. The 'hiccups' I was referring to seem to happen with applications that haven't been opened for some time, or while the computer is under some CPU load; in said event, any given application will take a bit longer to open. It really bugs me. With an SSD, I am sure everything would be fine, but it's not likely that I'd get one. I actually decided, though, to go with a fresh installation, rather than keeping this old user that was even from an installation of the previous owner's. I'm hoping that there won't be any significant slow-down as the installation sees use, etc. But anyway, so far so good.