Scott:
Start by checking your RAM integrity --
http://oca.microsoft.com/en/windiag.asp
Have you installed any new software recently, or could something have been installed to your system without your knowledge? Did Windows update try to install something recently?
It sounds to me like a program is a.) blocking the loading of the McAfee AV software, and/or b.) causing a memory leak that is taking up too much RAM. The symptoms you describe sound to me like insufficient (not faulty) RAM. (Your available HD space would have no bearing on this at all.)
Do you have at least 512Mb of RAM? You can check out the trial version of a program like MemTurbo
http://www.memturbo.com/Download.html to check your RAM usage.
Also, go to the Start button, select Run and run "msconfig". Then look at the Startup tab to see part of what's loading when you start the system. See if there is anything there that seems completely unfamiliar (unless you do this a lot quite a few things are likely to be unfamiliar, actually). You can also do Google searches on the names of programs to see what they're actually doing. Uncheck programs that you think may be unnecessary. You can always reactivate them if something "breaks."
You should also check the HD integrity. Go to My Computer, right click each HD and select Properties. You'll find error-checking under the Tools tab in the window that appears.
Restoring the factory defaults would be an ABSOLUTELY LAST DITCH solution and one that I've RARELY had to use. Before you do that, just try reinstalling Windows, making sure to start the process from within your existing Windows desktop, then just do an update or repair.