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"Moving 500 files from one directory to another should not take the Finder 2-3 minutes"
Huh? I just tried a similar test on a G4/400 AGP--a 4 year old mid-range Mac running OS X 10.2.6. I used the Finder to copy the contents of a folder containing 693 top-level items including 21 enclosed folders--a total of well over 1,000 files--to a folder on another disk.
Total time: 60 seconds flat.
It seems to me that your dual 867 is seriously fsck'd up, dude...