IMac :: Sometimes Unresponsive - Busy Beachball Popping Up

Our 1.5 year old iMac (20" iMac, 2.4GHz Core 2 duo, otherwise known as "iMac 8.1") has started to act really strange: the busy "beachball" popping up all the time, things lagging behind or being very unresponsive (e.g. I might access an application's menu or press a window button and won't get any response until a minute later). Booting is also an issue: often times the white screen which appears with the startup chime stays there forever with that spinning circle. Other times all seems well and the Finder desktop with the dock appears, but the Finder menu bar never shows up (or appears 20 minutes later!). I've also had instances when a large folder icon with a question mark on it appears right after the startup chime (I take it this means that a bootable drive isn't found or isn't working).

Strangely there are instances when everything works as it should. But something is obviously wrong with it. So what else have I tried in order to rectify or indicate where the problem lies:
- reinstalled MacOSX from the DVD while keeping the user data
- reinstalled MacOSX from the DVD, completely erasing the internal hard drive first (I've back up my user files on an external Time Machine hard drive)
- run "Apple hardware test" from the MacOSX installation DVD. No indications of damaged RAM.
- removed the 4GB memory upgrade (two 2GB DIMMs) and replaced it with the 1GB DIMM that came with the iMac when we bought it
- ran "Disk utility", checking the drive for errors, SMART status and permission issues
- booted into Safe mode (CMD-S while booting), then entering: applejack AUTO restart to do a deep fix/check of the drive
- done several PRAM resets (CMD-ALT-P-R while booting up, a couple of times after each other, repeating the startup chime)