700K is a big list indeed. I don't even use that big of lists on my 1000Mbit connection servers with 16 hyper threaded cores. There are lots of reasons sbox can hang. Like if you have a malformed list or one of the urls tries to be malicious. Also windows messaging can cause issues. Plus you have to account for the fact that its a 32 bit application, so if you run out of memory its going to crash, as it can only use 2GB of memory per instances. Try a smaller list.
Go for something like 200K. If it freezes, split it and try it. The reason being is its an easy elimination of something in teh list. If you split it and one freezes again, and the other works, then the bad urls are in the one that freezes. You can split it again and see which piece hangs etc. One handy thing that you can do is run it thru the malware addon, it can help rip out problematic urls.
$2000 USD really? You got ripped off. I can buy a nicer one then that for $1000 here in the states, it can't cost that much to ship it to where you are. Id take your pc back and just buy a server, you could get a years worth of a dedi with a 100Mbit connection for that.
Besides, I can say that a 200Mbit connection at home isn't as good as 100mbit connection in a data center. In a data center your physically closer to the DNS and the DNS is going to be significantly more Robust. Your DNS on a home company is likely to be a bottleneck, once you get above 15-20Mbit, DNS becomes your next issue to deal with. I am with AT&T in the states, both them and Verizon have great DNS, my 18Mbit AT&T connection danced circles, like many cirlces around my 65Mbit Comcast cable connection, because DNS was so slow.
As for Norton being a reputable program, sure they have good advertising and they block stuff, including scrapebox. My Mcafee has tried to blog both the Scrapebox.exe and a scrapebox addon this week alone. It blocked a Massive MMO game that my wife plays and I had to add it to the whitelist. Major A/V companies like Norton and Mcafee still block all kinds of legit stuff, and mind you, let bad stuff thru. Never trust them further then you can kick their installation disk.
Windows XP would be worse. Scrapebox is written in the windows 7 kernel so you get better "performance" (lack of a better word at 1 am). Next windows XP has only about 4K available ports vs win 7s something like 15K. Thats an issue because you can wind up having all ports open or waiting and then you have no inet access. Next it has the half-open connections set at 10 where win 7 doesn't have the half-open connections limit disabled by default. So XP would simply make it worse on multiple accounts.
Its unlikely the firefox download manager did anything.
Dunno about squid proxies, I only use Your Private Proxy, as I have tried many and they came out the most solid, so I stuck. I hammer them with hundreds of connections per IP simultaneously and they perform like its nothing.
With all of your patches, did you update your network card driver? Believe it or not, that can make a world of difference.