K2 Datagrid bound to XML field maxes out server CPU

Our environment is as follows:

K2.NET 2003 Server and IIS on one machine
SQL server on another

We have an app that uses an K2 XML datagrid bound to an XML field. This datagrid is used to capture data, not render it from the database. Every time a user clicks any of the action buttons (Add, Delete, Edit, Update) the action takes forever (10-45 seconds) to complete.

If we watch the server whilst waiting for the action to complete, we see the CPU (both 3.2 GHz CPUs!!!) get slammed by the IIS process. This even happens when we click 'Add' to add another row to the grid! It doesn't seem to matter what we are asking the grid to do. No matter what button we click the CPUs max out. As soon as the CPU finishes and settles out, the form does it's action (adding a row, for example).

Has anyone seen this behaviour? Is there some setting I've missed?

SlamCPU = 1, maybe? Haha.