Arixsin is likely correct in the assumption that a damaged media file is causing the problems. I had the exact same issue as you did with my wmpnetwk.exe however I did not have any reasons to have it running so I just killed the system process. Unfortunately not so simple for you.
Because of the affect its having on your PC I would suggest that for the time being you disable it and use another means for sharing around your media. It is very likely that Microsoft have notices this problem and will address it in the final release of Win7. For the time being though we are just going to have to deal with it.
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by: arixsinPosted on 2009-06-19 at 11:41:54ID: 24668906
Chances are that it is actually caused by a damaged media file. It doesn't have to be an AVI, but that is commonly the culprit. I have seen some reports that changing the "Windows Media Player Network Sharing Service" service in services.msc to "Manual" instead of "Automatic" may fix the problem. You could find the file in question by moving chunks of your media to somewhere else that is not shared until the problem stops.