geno, those blue files are zipped (compressed) files. The Uninstall files for the Windows Update are in blue> if you show 'hidden files and folders'. This is done either by the system or MS.
Give me some stats on hard drive size and RAM.
And I can give you a program to remove all the temp files- but you need to take a look at the Add/Remove Programs in the Control Panel. IF there are any programs you don't use or don't need, this would be a good time to uninstall them.
Have you been doing any maintenance on the system such as regular disc cleanups, error checks and defrags? (I understand you can't defrag now- I just want to know what kind of maintenance you've been doing.)