Unfortunately, none of us who I know that're handy have much/any experience with IIS; I did talk to Isaac and he mentioned that your Windows swap must be huge with that little ram, which could cause slowdown issues in itself.
templates/compile holds the compiled templates, as they're parsed.
cache/ holds some cache data relating to your forums
sessions/ will always be huge, as it holds session information for every user who accesses your site (guests and members).
The sessions folder is cleared by your webserver as needed.
