I'm not sure if this is the correct place for this thread, but I'll give it a try.
When starting up P.S.7, I get the following message:

"You currently have PS scratch and Windows primary paging file on the same volume. This could cause reduced performance. Reccomend to set PS on a different volume, preferably a different drive."

Can someone tell me what this means, if my PS is really not performing right and what to do to remedy this.
As far as I can tell, everything seems to be working correctly, but that may be just because I don't know how it is supposed to work.

It means your preferences file is getting reset when you start PS. The message is nothing to be concerned about, everyone with a single hd gets it when they start up PS with a new prefs file. More important is: why is your prefs file getting reset?