Cheers for reply - yeah think its definetly a psu issue as it is a budget 550w that only cost me Â£18 and I have 2 optical drives + 7600gt + x2 3800 + 1 7200rpm hard drive.
Really 550w should be easily enough but budget psu's are always lower than advertised and with lower amps on the imprtant 12v rail.
However I think I have managed to fix my problem by installing convertxtodvd encoder (superb program) and setting cpu priority to below normal. Funnily its encoding slightly faster (48fps) and I can surf/use pc with no slowdown.
I now realise just how important and underated a component a good psu is.