I am trying to determine if the horrendous lag as well as the warnings I'm receiving at the start of each game that:
(a) my system performance is slowing the game down and
(b) that I may need to decrease my graphics settings (which I've done)
is actually GPU system related or CPU system related.

Decreasing my resolution for 1600x1200 to 1280x1024 helped my framerate a bit, but I still get the errors and it still is almost stop-motion video.

Task Manager reports the following variations for both SC2.exe processes that run cocurrently:
IMAGE NAME: SC2
CPU USAGE: 03 to 06
MEM USAGE: 644k

IMAGE NAME: SC2
CPU USAGE: 80 to 89
MEM USAGE: 350,700k+

That's 83% to 95% of my system resources are being consumed by both SC2 executables when the game is running. 83% minimum is with my in-game graphics settings decreased to medium with the res set to 1280x1024. 95% maximum is using the game's recommended default settings (most are set to high)... including the 1600x1200 default resolution. Any ideas?

Here's my system info from DXdiag:

------------------
System Information
------------------
Operating System: Windows XP Professional (5.1, Build 2600) Service Pack 3 (2600.xpsp.080413-2111)
System Manufacturer: Dell Inc. Model: Dell XPS720
BIOS: Phoenix ROM BIOS PLUS Version 1.10 A06
Processor: Intel(R) Core(TM)2 Duo CPU E6750 @ 2.66GHz (2 CPUs)
Memory: 2814MB RAM (4G installed but it's only a 32-bit system)
DirectX Version: DirectX 9.0c (4.09.0000.0904)
---------------
Display Devices
---------------
Card name: NVIDIA GeForce 8800 GT (x2 in SLI)
Display Memory: 512.0 MB per card
Current Mode: 1600 x 1200 (32 bit) (60Hz)
-------------
Sound Devices
-------------
Description: Logitech G35 Headset
Driver Name: usbaudio.sys Version: 5.01.2600.5512 (English)
HW Accel Level: Full
--------------
Network Devices (LAN-WAN)
--------------
PC: Broadcom NetXtreme 57xx Gigabit Controller
Router: AT&T U-verse router
Service: ATT U-Verse 6Mbps

Hello Kurgan

Can you also post some information about your computer? You can find this information in the Direct X Diagnostic Tool:

Press the Windows Key and R
Type in: dxdiag
Hit Enter or OK

Click on the Save All Information button at the bottom, and create a dxdiag text file, and copy and paste the data from the dxdiag file into your reply.

I would like to see as much of the display adapter section as will post.

Some systems may reach high temperatures and overheating conditions while running StarCraft II. This is mainly due to the video card rendering the screens at full speed. As a workaround, there are two lines that you can add to your Documents\StarCraft II Beta\variables.txt file to limit this behavior.

Frameratecapglue=30
Frameratecap=60

The frameratecapglue controls the framerate at the menu screens. The frameratecap controls the framerate on all other screens. You may adjust these numbers to your liking.

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Q u o t e:
Some systems may reach high temperatures and overheating conditions while running StarCraft II. This is mainly due to the video card rendering the screens at full speed. As a workaround, there are two lines that you can add to your Documents\StarCraft II Beta\variables.txt file to limit this behavior.

Frameratecapglue=30
Frameratecap=60

The frameratecapglue controls the framerate at the menu screens. The frameratecap controls the framerate on all other screens. You may adjust these numbers to your liking.

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I think you may have missed that post.