As a rule when you install most modules - asp.net will force a restart of your application poll and a recompile of all dynamic elements.  This should however only take small amount of time - 15-20seconds on most properly configured severs.

If its taking such a long amount of time - I would suggest that you need to look at your server configuration.

Based on what you have noted - I would suggest that the performance issues are most likely to be related to memory issues - and more specifically that the server is excessively paging due to insufficient memory allocation.

While YES technically a 2008 R2 server 'can' operate on as little as 512meg - most people find that 8gig is more like the sweet point for most system.   This is especially the case if the system also has MS SQL server running on the same box.

Westa