SNIP
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>We tried minimizing data in the database by deleting half of the records but there is no noticeable effect. It's still sluggish. We also defragged and reindexed all tables in the database but to no avail.
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Jess,

Just FYI, defragging could make a situation worse. Much worse in some cases.

Defrag (the standard Windows one) pays no attention at all to file 'relationships' and simply puts a file in the first place that it will fit.
So you could easily end up with the table in one place and the CDX far away from the table and the FPT far away from either/both the table and the CDX. Now think of this happening with all files of your application!

If you did the REINDEX after the defrag you may end up in a better situation. If you did it before then there's really no hope other than chance.