iMac 24 C2D freezing, beach ball, pinwheel

Hello wonderful user community!

I am helping my wife with this issue, she's never posted on the ASC before.

In the last two weeks my iMac has started behaving strangely. It doesn't seem to matter whether running Spotify, Chrome, Firefox, or other applications, I will get beach balls, seemingly at random intervals. If watching a video on Youtube or Netflix, the picture will freeze the but the audio will continue. You can't Force Quit or make any commands in other applications, so it seems to be system wide. If someone is playing a video from my hard drive from the LAN, their video playback will freeze. After 15 secs to a minute or more, the machine will resume normal operation.

What I've tried:

The OS was installed less than a year ago from 10.6 disk and updated to OS 10.6.8 using Combo Updater.

Disk Repair Permisions

Disk Repair (boot from external drive)

reset PRAM

Take to Genius Desk at Apple store (results inconclusive, no hardware issues)

Activity Monitor shows no app in particular hanging

I'm about to cut and run on this thing, put it on Craigslist, and move on.

Any light shed on this would be incredibly helpful. I work from this iMac while my daughter watches videos on a 2nd monitor throughout the day. At night it's our TV and we watch movies on it. Needless to say it's an integral part of our lifestyle.

Hardware Overview:

Model Name: iMac

Model Identifier: iMac9,1

Processor Name: Intel Core 2 Duo

Processor Speed: 2.66 GHz

Number Of Processors: 1

Total Number Of Cores: 2

L2 Cache: 6 MB

Memory: 8 GB

Bus Speed: 1.07 GHz

Boot ROM Version: IM91.008D.B08

SMC Version (system): 1.45f0

Serial Number (system): YD9*****0TG <Serial Number Edited by Host>

Hardware UUID: 93EC2F20-E293-50E4-9EC3-F0401B5D8D65

Console sample taken during time period of several hangs: