I'm gonna answer these 1 by 1:
-Yes my drivers are up to date.
-I double checked and yes I have a single core processor after all
-I tried running it with anti virus turned off same problem, I don't have any peer to peer connection.
So I guess logicearth was correct is there any way around this or I just have to buy a better processor to use win 7?
Hard to say without knowing more about what's causing the CPU usage in the first place, and for how long it lasts. Is there anything specific you do regularly that seems to trigger it? Also, have you looked at resmon while it's occurring to see what process it's saying is utilizing the CPU at that time?
Well, next step is running Task Manager and see what the top CPU Resource hogs are first to see what is spiking your processor to 100%. I haven't really seen anything on my system, even though it is a dual core, to even make it run at 50% doing what you are doing. It suggests to me there is some process trying to do something frantically for no good reason and short of a really intensive process, it shouldn't be hammering your system, even for a single core, for 100% just doing youtube.
Right now, as an experiment, I am on an XP machine with 1.5 gigs of ram, single processor (Yes, I know, it is not win 7), but at the moment, I have IE, firefox, Winamp, Outlook and Office communicator running at the moment, and going to youtube while Winamp is running. I am watching the CPU graph fluctuating between 46 to 80% CPU usage with Youtube going, but not 100% completely capped and no screen issues.
The only thing I have seen really slowly down systems (And yes, again in the XP time design) was when systems had high disk activity (Sometimes resulting from heavy virtual memory swapping due to having 512 meg of ram and lots of apps running)
The only thing I can suggest is to have task manager running and observing what processes are running and also watching your disk activity. Unfortunately, disk activity rarely coincides with the CPU usage, but does result in sluggishness in the system due to the system juggling writes and reads to disk for Virtual Memory handling and actual disk work and so the system slows down due to the disk being the slowest part of the system.
Again, the only way to narrow it down is having Task manager up and watching the processes, get the top key ones that are eating up your processing times and then finding out what they are doing.
I had the same problem as you, the only thing that I could do was lowering the priority of the war3 usage from task manager from Normal to Low, and now it works fine.
I recommend a SysInternals App called ProcMon (Process Monitor) for troubleshooting. Process Monitor.
Watch the 'The Case of the Unexplained' series Mark's Webcasts, cases of troubleshooting on windows sluggishness, malware problems with SysInternals tools.
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