Well, i don't have a performance problem with current nVidia drivers on my work PC at least (C2D 8200/GTS 250), so it's either i7 or Geroce 5xx incompatibility since you disabled the sound at all (btw, sound needs to be disabled in options.exe, turning it off in the game settings doesn't turn it off completely). It's hard to help since i don't have experience with i7 or 560 myself.
I remember one of the users on Steam forum said he was able to greatly increase performance using Process Lasso software (trial version). Maybe you'll give it a try?
Another 'soultion' is to run a 3d game, then alt+tab from it, leave it running in the background and run ToW. This helped people who have built-in/dedicated GPU combo, but you can try. Maybe this slowdown issue is caused by CPU or GPU throttling down because it doesn't recognize ToW being an intensive task.
By the way, do your options save when you close options.exe? If not, you need to run it using 'run as asministrator' context menu command.