Haven't seen this problem (or solution) before.
Serves me right for not writing the solution down. I saw it at written as an afterthought at the tail end of another post and it worked like a charm. Only now after I reinstalled CS5 I need the solution again and can't find the post. I have to wait at least a minute or more after pressing CTRL M before the export settings window opens.
Here's the fix to which I was referring, supplied by a colleague on Linked-In:
"There are 2 instances of a codec that need to be turned into a .bak file.
First you go into C/program files/Adobe Media Encoder CS5/MediaIO/codecs to find a file "SurCodeWrapper.vca" Change it to "SurCodeWrapper.vca.bak" do the same thing in C/program files/AdobePremiereProCS5/MediaIO/codecs with the "SurCodeWrapper.vca file there too. This WILL fix the lag. I think you lose surround sound encoding by doing this, but this hasn't been a problem for me."