I have gotten to manage a new server running NW5.10 SP11 and any time a folder has more than 4000 files its performance for all users drops to a crawl.

It has 3GB RAM and 2 Harddisk, 1 for Sys and one for user data.
Both are 95% full.

As soon I deleted enough files to get from say 4000 back to 2500 things are speedy again.
For example, running a dir in a directory with more than 4000 files will takes a long time display each line so slow you can read it with no problem, after deleting old files and running a dir with less than 4000 files, the lines fly fast on the screen.

Here is some of the Info I got:

General Information
User Count: 575
Logged-in Users: 385
Maximum Logins: 505
Connection Count: 675
Maximum Connections: 0

File System
Reads (Kbytes):
Writes (Kbytes): 1551648
Maximum Open Files: 3658588
Open Files: 200000
Maximum Record Locks: 314
Record Locks: 20000
Maximum Directory Tree Depth: 331

File caching
Dirty Disk Cache Delay Time 3sec
Maximum Concurrent Disk Cache Writes 750
Minimum File Cache Buffers 20
Minimum File Cache Report Threshold 20
Read Ahead Enabled ON
Read Ahead LRU Sitting Time Threshold 10sec

Directory caching
Directory Cache Allocation Wait Time 2sec
Directory Cache Buffer NonReferenced Delay 5sec
Dirty Directory Cache Delay Time 1sec
Maximum Concurrent Directory Cache Writes 75
Maximum Directory Cache Buffers 4000
Maximum Number Of Directory Handles 20
Maximum Number Of Internal Directory Handles 100
Minimum Directory Cache Buffers 150

I have asked to former admin if he knew about this problem, and he said he had a batch job running to clean up the most common folders that would normally go over 4000 files.

I Believe this might just be a tuning issues, it has 3GB ram and the problem is clearly not related to the number of users hitting it, since every goes down the drain with the someone starts accessing a directory with over 4000 files in them. (Files like .Doc, . Dbf., or lots of 1kb temp file etc)

I have tried to find a tuning document specific for this issue but I might not have found to right keyword to search because I have not find something that might help me.

Has anyone seen this before and found a solution? Or what should I be looking for?