How does your computer react when running other power-hungry apps? Does it slow down signifigantly? The reason I ask is because of your 64MB of RAM. If there's too little memory for your applications it'll cause Windows to "swap" memory out to the hard drive, where it can be retrieved later. While this is good, since it allows your computer to run without gigs of RAM loaded, the downside is that when signifigant swapping occurs the system slows to a crawl.
Does anyone else here have experience in running ePSXe with that amount of RAM? Is it slow for you also?
You might want to try disabling any sort of startup items you might have, close any other applications you might have open in the background and check to see that "DMA" is set on the system properties of your CD-ROM drive.