If you're having problems with your computer after upgrading to Windows XP SP2 and you are using a software firewall such as ZoneAlarm or BlackIce, try uninstalling your firewall software and re-installing it. That solved the problem for me. BlackIce recommends uninstalling their firewall before upgrading to SP2.
On two different machines (one with ZoneAlarm and the other with BlackIce), I had simply upgraded to SP2 and turned off the Windows Firewall. Even so, my machines would freeze up, especially when performing network operations. It seems that even with the Windows Firewall off, there's some sort of contention for the network devices that is resolved by reinstalling.