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Sounds to me like the hard drive has some failures in it, probably just from age. Sometimes people forget that they are platters, and much like CD's can be easily damaged.
The fact it freezes specifically when you try to transfer files is what leads me to think that. Depending on your laptop, you should be able to remove the HD pretty easily. You could get an external with an operating system on it and boot from the drive, see what happens.
Linux is a great OS, if you can find one that is tweaked to your liking. If you are a technodunce, it may not be the best choice for you.
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