Yeah, XP can be made pretty rock solid. Once everything's set up, you can leave it as is.
You know you can turn off auto-updates right? Do you even need it connected to the net? Cutting that off can simplify things.
Stupidly, when I first set up my cabinet, I had a USB wi-fi adapter plugged into it so I could access the internet. A few months later, I had a problem similar to what the OP is describing--games just wouldn't load.
Then, I bought the cheapo used PC I mentioned earlier, kept it isolated from the internet, and it has run like a dream since without any issues or degradation in performance.
I think the moral of the story is to keep the setup of your MAME PC as simple as you can bear. There really is absolutely no reason why an arcade machine needs to connect to the internet, other than to have its owner say, "hey look, my arcade cabinet connects to the internet!" The complications it brings are just not worth it--use your other computers for the internet.
I know it's nice and convenient to be able to download stuff right to your cabinet (new ROM's, emulators, etc.) but there are other ways to handle such things that don't expose you to risk. The most obvious is to transfer stuff to the MAME PC with USB drives and the like. That's probably sufficient for most people--after all, how often do you really need to do such things?--but I have more of a lazy man's solution implemented at my house. I happened to have a spare wireless router kicking around, so I used it to set up a second wireless network. This second network is not connected to the internet--it's just a "floating" router that broadcasts a second SSID into my home. Essentially, it works like a wired LAN; I use this network to transfer data wirelessly to and from my MAME PC using my main home computer. Easy-peasy, and the best part is, my MAME PC stays free of cyber-clap.