Slow Slow Slow

Okay, I have gone through all of the basic troubleshooting steps and have searched and searched on how to resolve this issue.

The details:
-Entire computer is slow, this happens even right after start up.
-The beachball of death is my computer's new best friend, but I don't approve of the friendship.
-No known changes were made to make this happen.
-It is slow even when I have 2 gb of ram free and 98-100% idle cpu.

The computer:
-2007 Imac 20"
-2.4ghz intel core 2 duo
-4gb of ram
-Mountain Lion OS (It did slow down a bit with the OS upgrade that I made a couple of months ago, but it has been tolerable until yesterday)

What have I done to try to resolve it:
-Gone through the entire troubleshooting guide although a couple of things seemed odd. The when resetting the PRAM it restarted 3 times, it never gave me a triple chime and when resetting non-volatile firmware it didn't ever give me a text box so I guess I didn't do that.
-Cleared some junk out of the startup
-Looked at activity monitor and didn't see anything odd (not to mention that most of the computer's resources are free when it is acting slow and it only gets worse when loaded)

Does anybody have any good ideas? My wife thinks that the mac has some sort of 5-6 year timer that brings it to a halt to get us to buy a new computer

Thanks in advance.

Did you run the Apple Hardware Test or the SMART Utility? I'd be curious to see about the integrity of the hard drive.

Thanks for the additional ideas. I did run the SMART utility through OnyX which didn't show any problems. It looks like my computer has the hardware check on the disk which is in my sleeping daughter's room, so I will try that out tomorrow.

Any other thoughts?

Does that 20" iMac have a 320 GB Hard Drive? I have the same machine and about a year or so ago after installing a new OS, I had the slow downs and it was the WD 320 GB Drive slowly dying. Put in a new drive and it was like new.

yes it does have a 320gb drive. I ran the Apple Hardware Test and it said I had a hard drive problem, so I got a new hard drive and installed it.

The problem I am having now is that I can't boot from the CD for some reason. My only other computer is on WinXP. Is there any way to create a bootable disk using either an external hard drive or a thumb drive? I will create a new post for this topic so the thread doesn't get convoluted.