It does sound like some kind of spy program is active on your system.

Look in your Control Panel, and click Ad/Remove software and see if a program like Carbon Copy has somehow gotten on your computer.

A lot of what you've done are the things I would suggest. If something is recording your keystrokes, or stealing time from your screen (sending it someplace else) that might account for the latency in your keystrokes.

There are programs out there to clean the registry. Some are free, some shareware. There are vaious ones available for different versions of windows at download.com:

http://www.download.com/3120-20_4-0.html?qt=regclean&tg=dl-2001

Spyware is getting harder and harder to detect and dispose of. I have everything kind of tool known to man, but my assistant at work had her computer so infested it took me days to clear it all out.

My daughter had her computer so infested it could not connect to the Internet at all. I finally did a new install of Windows 2000, and that cleared it up.

I doubt that another person is actually watching you. It's probably just one of those programs that has hooked your keyboard and/or screen.

I'm sorry I don't have a really clear answer, it's just that there is so much stuff out there and it keeps changing all the time. I think in a lot of cases, this spyware is way worse than Virus's. Frankly, I don't know why we consider them to be two different things.