No no no, not even a badly fragmented drive can cause this, once the textures and everything are loaded into memory, the hard drive won't affect fps, it may cause slow load times, but once the game is running, everything will be in memory, and he has plenty for LFS. In fact, with his system, he should have no trouble running the fps he mentioned he was getting originally.
Something else is wrong, I recommend uninstalling you video card's drivers, then use a driver cleaner, reboot and install the newest drivers from nvidia.com . From there, if that doesn't help, well, I'd start with this, is LFS the only game that does this? If so, backup skins, setups, etc etc, and reinstall the game entirely. If all games are doing this, you've either got a corrup driver somewhere, or you're overheating somewhere and the machine is throttling back.
Post a DXDiag if all else fails, there's just no way a fragmented drive could cause this, unless you're getting extreme disc thrashing, running out of virtual memory, and the swap file is going nuts trying to keep up, and a fragmented drive from there can make it worse, but, still LFS uses very little memory, and since you don't have anything else running in the background, I find that unlikely. Like I said, even the worst fragmented drive in the world shouldn't effect fps, because once the game is loaded, and you're in the race, everything should be in system and video memory.
Maybe someone else can help if my few tips don't, but I can almost certainly say it woudln't be your drive, because, I mean, once it's loaded(and a fragmented drive will cause terrible load times, and eventually errors on the drive) the hard drive serves little function, on an otherwise healthy system.
If you haven't cleaned out your case in a while, start there, and make sure your fans are functioning. Good luck.
I actually had a similar system a while back, and the 7600 is just, a powerhouse in terms of LFS, heh, it doesn't need much power, you should be able to run a nice high resolution with AA and AF with little trouble.