at first glance, I would say your RAM is what's letting you down. I have mine on a P4 2.8GHz with 1gb ram and it works fine almost like my 500MHz pocket pc
I would suggest doing this on your system to improve performance:
turn of system restore (right click computer, system restore tab)
again, on the computer properties, select advanced and perforamnce, then set it to best performance. this will turn off all this windows bells and whistles (like menu fading and all that crap)
next, on the advanced tab under performance, set the virtual memory to a fixed file size by setting the intial and maximum size to the same number. something like 1024mb should be good.
finally, have a look at documentation for the emulator, you'll find there are some switches you can pass in, like how much ram to have etc.
I used something like this:
start "C:\Program Files\Windows CE 5.0 Emulator\Emulator_500.exe" /CEImage "C:\Program Files\Windows CE 5.0 Emulator\NK.cem" /sharedfolder "C:\Program Files\Windows CE 5.0 Emulator\StorageCard" /nobootscreen /vmname TomTom /serialport1 COM1 /video 640x480x16 /memorysize 256 /Ethernet virtualswitch
you may want to change the video to 320x240x8 also, and the memoy down to 128
good news is that version 2 of the emulator is out with improved performance apparently. I'm currently trying to download it.