I'm having similar problems with this game, and Fable too.
When I start playing, it's allright, but then, like in 3 to 5 mins, it starts to lag, the fps go down (from 60 to 15, for example), and if I close the game, and I run it again, its does the exact thing over again.
My PC is:
Motherboard P35Neo MSI
Video Geforce 8600 GT XFX
HDD Hitachi 320Gb Sata
CPU Core 2 Duo 2.3 Ghz
I tried went back to older drivers from the graphic card, but it's the same. And this worked perfect yesterday on Vista... Everything else works fine.
Note: I did an upgrade, not a fresh install. If an upgrade it's not safe, it shouldn't even be there.