This is very strange. I installed on a second PC and am not having the same problem. On the first PC, it's taking about 5 seconds to navigate from one folder level to another. When I navigate to TV Shows or Movies in library mode, there is no delay. It's only a problem navigating through folders. Here are some snippets from the XBMC.log. The folders are on local hard drives.
14:27:15 T:3608 M:1216598016 DEBUG: SDLKeyboard: scancode: 28, sym: 13, unicode: 13, modifier: 0
14:27:15 T:3608 M:1216598016 DEBUG: CApplication::OnKey: 61453 pressed, action is Select
14:27:15 T:3608 M:1216598016 DEBUG: CApplication::ExecuteXBMCAction : Translating ActivateWindow(VideoFiles)
14:27:15 T:3608 M:1216598016 DEBUG: CApplication::ExecuteXBMCAction : To ActivateWindow(VideoFiles)
14:27:15 T:3608 M:1216598016 DEBUG: Activating window ID: 10024
14:27:15 T:3608 M:1216598016 DEBUG: Checking if window ID 10024 is locked.
14:27:15 T:3608 M:1216598016 DEBUG: ------ Window Deinit (Home.xml) ------
14:27:16 T:3608 M:1216483328 INFO: Attempting to default to: Video Camera
14:27:21 T:3608 M:1216503808 INFO: Success! Opened destination path: Video Camera
14:27:21 T:3608 M:1216454656 DEBUG: ------ Window Init (MyVideo.xml) ------
14:27:21 T:3608 M:1216454656 INFO: Loading skin file: MyVideo.xml
14:27:21 T:3608 M:1216421888 DEBUG: Load MyVideo.xml: 30.38ms
14:27:21 T:3608 M:1216299008 DEBUG: Alloc resources: 33.27ms (30.49 ms skin load)
14:27:21 T:3608 M:1216299008 DEBUG: CGUIMediaWindow::GetDirectory (multipath://M%3a%5cVideo%20Camera%5c/M%3a%5cPhotos%5c/)
14:27:21 T:3608 M:1216299008 DEBUG: ParentPath = [multipath://M%3a%5cVideo%20Camera%5c/M%3a%5cPhotos%5c/]
14:27:26 T:3568 M:1216000000 DEBUG: CGetDirectory:
oWork retrieving multipath://M%3a%5cVideo%20Camera%5c/M%3a%5cPhotos%5c/
14:27:26 T:3568 M:1216000000 DEBUG: CMultiPathDirectory::GetDirectory(multipath://M%3a%5cVideo%20Camera%5c/M%3a%5cPhotos%5c/)
14:27:26 T:3568 M:1215995904 DEBUG: Getting Directory (M:\Video Camera\)
14:27:26 T:3568 M:1215995904 DEBUG: Getting Directory (M:\Photos\)
14:27:26 T:3568 M:1215995904 DEBUG: CMultiPathDirectory::MergeItems, items = 53
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [000] M:\Video Camera\2009-11\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [001] M:\Video Camera\2009-12\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [002] M:\Video Camera\2010-01\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [003] M:\Video Camera\2010-02\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [004] M:\Video Camera\2010-03\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [005] M:\Video Camera\2010-04\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [006] M:\Video Camera\2010-05\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [007] M:\Video Camera\2010-06\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [008] M:\Photos\Christine's Old Pictures\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [009] M:\Photos\iPod photos\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [010] M:\Photos\My Pictures\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [011] M:\Photos\My Pictures 2\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [012] M:\Photos\My Pictures 3\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [013] M:\Photos\My Pictures 4\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [014] M:\Photos\My Pictures 5\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [015] M:\Photos\My Pictures 6\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [016] M:\Photos\My Pictures 7\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [017] M:\Photos\My Pictures 8\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [018] M:\Photos\My Pictures 9\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [019] M:\Photos\My Pictures 10\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [020] M:\Photos\My Pictures 11\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [021] M:\Photos\My Pictures 12\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [022] M:\Photos\My Pictures 13\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [023] M:\Photos\My Pictures 14\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [024] M:\Photos\My Pictures 15\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [025] M:\Photos\My Pictures 16\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [026] M:\Photos\My Pictures 17\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [027] M:\Photos\My Pictures 18\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [028] M:\Photos\My Pictures 19\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [029] M:\Photos\My Pictures 20\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [030] M:\Photos\My Pictures 21\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [031] M:\Photos\My Pictures 22\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [032] M:\Photos\My Pictures 23\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [033] M:\Photos\My Pictures 24\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [034] M:\Photos\My Pictures 25\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [035] M:\Photos\My Pictures 26\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [036] M:\Photos\My Pictures 27\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [037] M:\Photos\My Pictures 28\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [038] M:\Photos\My Pictures 29\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [039] M:\Photos\My Pictures 30\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [040] M:\Photos\My Pictures 31\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [041] M:\Photos\My Pictures 32\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [042] M:\Photos\My Pictures 33\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [043] M:\Photos\My Pictures 34\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [044] M:\Photos\My Pictures 35\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [045] M:\Photos\My Pictures 36\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [046] M:\Photos\My Pictures 37\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [047] M:\Photos\My Pictures 38\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [048] M:\Photos\My Pictures 39\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [049] M:\Photos\My Pictures 40\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [050] M:\Video Camera\old videos\
14:27:26 T:3568 M:1215995904 DEBUG: Testing path: [051] M:\Photos\Professional Wedding Pictures\
14:27:26 T:3568 M:1215995904 DEBUG: CMultiPathDirectory::MergeItems, items = 53, took 1 ms
14:27:26 T:3568 M:1215995904 DEBUG: CGetDirectory:
oWork retrieving multipath://M%3a%5cVideo%20Camera%5c/M%3a%5cPhotos%5c/ succeeded
14:27:26 T:3568 M:1215995904 DEBUG: CGetDirectory::OnJobComplete called
14:27:26 T:3608 M:1215995904 DEBUG: Saving fileitems [multipath://M%3a%5cVideo%20Camera%5c/M%3a%5cPhotos%5c/]
14:27:26 T:3608 M:1215995904 DEBUG: -- items: 52, sort method: 1, ascending: true
14:27:26 T:2136 M:1215930368 DEBUG: thread start, auto delete: 0
14:27:26 T:2136 M:1220579328 DEBUG: Thread 2136 terminating
14:27:31 T:3608 M:1225080832 DEBUG: SDLKeyboard: scancode: 56, sym: 308, unicode: 0, modifier: 0
14:27:31 T:3608 M:1225080832 DEBUG: CWinEventsWin32::WndProcWindow is active
14:27:31 T:3608 M:1225080832 DEBUG: CWinEventsWin32::WndProcWindow lost focus
14:27:31 T:2128 M:1225080832 DEBUG: Thread 2128 terminating (autodelete)
14:27:31 T:3568 M:1225080832 DEBUG: Thread 3568 terminating (autodelete)
14:27:31 T:3608 M:1225322496 DEBUG: CAnnouncementManager - Announcement: ApplicationStop from xbmc
14:27:31 T:3608 M:1225322496 NOTICE: Storing total System Uptime
14:27:31 T:3608 M:1225322496 NOTICE: Saving settings
14:27:31 T:3608 M:1225281536 NOTICE: stop all