What is your actual FPS when you run the game(download fraps at
www.fraps.com if you don't know how to check it)? Do you have VSync and Triple Buffer set to 'on' in the detail settings? They can smooth out the rendering of games sometimes.
Your 8600 is more then worthy to run Live 06. One thing could be hard drive fragmentation, but I'm just tossing that out there because it can cause "hitching" in FPS games when turning corners. I highly doubt that it could be a cause of the problem.
Maybe it's because of your X2. That is a dual core processor, I believe. Try opening the Task Manager(CTRL+ALT+DEL) and setting the processor AFFINITY to only one core, or the other core.