Steam is lagging my pc badly

[adza0975]

I can use my PC for any gaming whatsoever outside of Steam. But as soon as i log into Steam with my password, about 5 seconds later, the PC lags and the HDD sounds like it struggling to work. The HDD is working in some sort of pattern, the RED light will stay in for 3 seconds then go off for 1 second,then come back on for 3 seconds. This is constant as does not change. trying to do anything with the PC is just about impossible.
I have a i5-2500k, Nvidia GTX-560, 4Gb RAM, 500gb HDD.
This only started happening at the start of January, and have restored my PC back to them incase it was a driver conflict, but no go.
The nvidia driver i was using was 310.97, but have rolled back to 296.10, which did not help either

Stuck for ideas now...