What display interface (GPU) does that system have in it? It is possible Windows Update delivered a bum driver, though that's not that likely as usually with laptops one has to get drivers from the site of the manufacturer of the machine (Dell.com in this case).
Forget about defrag for now. That's boilerplate stuff it seems everyone says, and it never fixes anything. Windows 7 normally keeps its disks defragged on its own, and disk fragmentation even if extreme is only going to impart a minor slowdown - it sounds like you have something night and day major going on.
And don't do a "registry cleanup", whatever that means. Running some piece of software someone somewhere else dreamed up is akin to pouring water through the machine to clear out debris.
One thing to do, especially if you haven't used the system in a while, is to check the Windows event logs for events indicating possibly the hardware is ailing or failing - for example recoverable disk errors.
What's running on the machine? How many processes are showing in Task Manager?
Have you installed software from Google or Yahoo (e.g., toolbars)? Those are generally awful - akin to malware.
How technical do you want to get? There's a good free tool called AutoRuns for checking just what software is starting on your system in the various different ways. http://technet.microsoft.com/en-us/sysinternals/bb963902
-Noel
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