Windows XP SP2 freezing upon clicking Shut Down

I've just built a new machine running XP SP2. Everything's running well, no ad/spy/malware, minimal startup items etc.

Only one annoying issue: upon clicking "Turn Off Computer" on the start menu Explorer freezes with an hourglass for around two minutes. The mouse can be moved but the whole screen is locked. The Shut Down menu eventually appears after a long (over a minute) wait.

During the freeze everything else is still active however, i.e. pressing CTRL-ALT-DEL brings up Task Manager, whereby I can terminate and restart explorer.exe solving the problem, and find all previously open apps still there.


The odd thing is that clicking "Log Off" instead of "Turn Off..." works as intended

This is driving me up the wall. What could be causing it?

 

Check this registry key.