Smoke lags my mouse and creates abnormaly bad FPS in CSS

[hellokitty[hk]]

Whenever I play CSS, smoke from smoke grenades or he grenades seem to lag my mouse a lot (almost a second while in the middle of a single smoke), and lower my FPS to about half in the middle of a smoke. When an HE explodes on screen, my mouse lags, my FPS goes to about 80 - 90, while my game DOES NOT LAG (guns shoot at a consistant rate, sound is normal, visually seems normal as I can't move my mouse fast enough to notice the fps drop).

I don't think this has ever happened before and seems like a recent issue.

When I played at max settings a while ago, 16 x AA, 1920 x 1200, and all advanced settings set to highest, I only noticed slightly problematic FPS, never mouse lag or FPS going to half (50 - 60 fps)

Now, I use all default graphical settings form Kaizens config attached as a txt, and yes mouse filter is disabled. Usually, I get about 120fps before I execute my config, and get a consistent 100 fps because of the cap in my config.

I did at one point use custom skins which did NOT lag whatsoever, and have since removed the skins and reinstalled.

Core 2 duo E4600 @ 2.4ghz
9600gt (underclocked while I play css at 490/1225/675 (1350) core/shader/mem, overclocking marginally improves FPS, but not mouse lag)
2 gigs DDR2 800
24" monitor, 2ms and 60 hz
Windows XP SP2