Dragging the handles results in a perfectly interactive resize of the image for me. When I tried it just now after reading your post I was actually surprised at how smoothly and quickly it resampled.
With any display issue, it never hurts to check your video card maker's web site (nvidia.com) for updated display drivers, and download/install them if any are available.
Here's my problem
When I try to resize an layer using the move tool (as opposed to the Free Transform tool), while I'm in the process of moving the scaling handles, the bounding box reflects my movement but the layer preview stays at it's original size. When I stop moving the handles there is a few seconds delay and then the new scale size shows up. If I try to move the handles again, without commiting to the transform, the layer preview reverts back to it's original size until I've finished moving the handles.
I also read you you tried updating your video dirvers and your syste crashed and you had to roll back. Make sure you have downloaded the latest correct drivers. If that does not work try turning off Open GL in photoshops preferences.
On my old XP 32 bit system CS5 movet tool with transform dialog does not fail like on your system. I can move the handles time and time again without commiting the transform. The only way to have Photoshop revert the transform back to the original state is to press the ESC key to cancel the uncommitted transform.