SOLVED!!!!
From what I can tell, Arduino runs it's version of Java in Arduino\Java folder by default. When you rename the folder, it ran the other copy I have installed (Version 6 Update 17) from Program Files\Java. In either case, it still kept freezing. I uninstalled Java 6, deleted Arduino, and re-installed Arduino. It didn't freeze. I re-installed Java 6. It froze. I renamed the Arduino\Java folder, and now it works. Just to make sure, I named it back to the original, and it freezes.
Must be an incompatibility between the bundled version of Java in the Arduino software and the other one I have installed. I don't get it, but now I can save my code instead of pasting form freakin Notepad. Thanks for all your help everyone, hope this helps out someone else with the same problem. I don't get why it happened, I have a very generic setup with a honest copy of XP Pro and am running all normal run-of-the-mill software.
Thanks,
Steve