Hi,
I also get similar lockups. They seem to occur at specific and random (ie depend on the state of the world at that time) points, and mostly occur in bursts of three or four (ie, lock for 8 secs, 2 secs ok, lock for 8 secs, 2 secs ok, lock for 8 secs, then ok).
I think it is to do with model loading, for example, when I leave the Laanx Dungeon, on the staircase, the game will freeze as described, and the Grendol will send me to DR. I have only escaped the Grendol once, but only because he was busy with another player. This has happened 3 times now, I expect it to happen.
My PC is P4 3GHz, XP, 1.5GB RAM, ATI x1650 GFX (problem still happens with latest drivers and ATI9600pro and NVidea 5200), so it is within spec.
I have tried deleting the shader cache, and re-installing PS from scratch (and lost my quest logs :-( ), and currently running at 800x600 with all settings at medium or low. There is no apparent difference between 800x600 & 1024x768.
Just recently, the last week, the problem has got worse, I attacked a trepor near the Green Ruins, realised I could not kill it (weak or what!) then ran. The Trepor chased me right back to the Hydlaa portal, the freeze as described occured five times, each time the Trepor overtook me! once reducing my life to almost zero.
The freezes seem to preceed the appearnce of an NPC, I think.
I did not have this problem this time last year, what ever version that was.
Hope this is helpful, and hope for a fix.