Defraging your drive regularly on a Windows system is about all that can be done.
If you are working with files of that size an upgrade in Ram is a must. Photoshop will love you for it.
What CPU do you have and what media player are you using?
When and how often should I defrag? It takes a long time.
Yup. I'll add more rams.
I have a 2.4GHz P4, and uses MS' Media Player. Does the player makes a performance difference?
The frequency of defraging depends on how often info gets written to the drive. Ideally once a week but more realistically monthly.
Defrag you drive and then check it again in a week. The defrag tool will show you how fragmented the drive is and give you an idea how quickly it gets fragmented.
Something is not right if you are coming to a crawl just playing a CD. Your system is faster than my WinPC system and I can do more at once on that.
Yes, the media player you use can have an effect on performance. Many unfortunately take up a good 23-50mb of ram just to play a 3MB mp3 song. If you have windows media player 8 definitely upgrade to 10. it is much more efficient (8 was awful). Minimizing the player when you are not playing with the controls frees up some resources or using a lightweight player like Winamp is better.
I don't think the media player is the main culprit though. It very well could be but I'd check for other issues as well just in case.
Run anti-spyware scans using Spybot, Adaware and MS Antispyware tool and then run a virus check just to be sure.
What software do you have running in the background?