Engine(not net) Lag Spike

The engine is lagging, not my internet(wasn’t even online).

Operating System: Microsoft Windows XP Professional Build 2600
Service Pack: Service Pack 2

Total Memory Size: 3 GBytes (1GB, 2GB)
Current Memory Clock: 387.5 MHz
Memory Runs At: Dual-Channel

Processor Name: AMD Athlon 64 X2 5200+
CPU Brand Name: AMD Athlon™ 64 X2 Dual Core Processor 5200+
Original Processor Frequency: 2700.0 MHz Per core.

ATI Radeon HD 5770
Video Chipset: ATI Radeon Graphics Processor (0x68B8)
Video Memory: 1024 MBytes of DDR
Processor Clock: 850.0 MHz
Memory Clock: 1200.0 MHz (Effective 2400.0 MHz)

Motherboard Model: ASUS M2N-MX SE Plus

Normal:
http://img163.imageshack.us/img163/6910/gmconstruct0005t.jpg

During Lag spike, notice the “lerp” thing turn yellow.
http://img63.imageshack.us/img63/3180/gmconstruct0007r.jpg

If you need anymore information, let me know.

Thanks.
-Gary