I have been having similar issue. Purchased S2 license and played using keyboard for a week just fine, a little slowdown at T1 with twenty cars but nothing too serious.
Then my G25 arrived and the problems started. Also coincided with patch X10 update. I've tried dumbing down the graphics as much as possible, but T1 is typically below 5fps, and hairpins/chicanes can be 10fps. Basically, the game is unplayable.
My PC is 2.4Ghz, with 512 Ram, Radeon 9200SE card, running windows XP. Is this good enough?
Defragged last night, and there has been no improvement. Any help/advice would be very much appreciated.