How can I reduce the time it takes to sync my ipod touch

From everything I've read, photos do seem to be the biggest factor in long sync times.

Exhibit A: This blog post suggests to not sync photos:

If I have photos unchecked, everything syncs and it's fast (7 seconds).

You can give that a shot to see if your sync time improves (as a troubleshooting measure)

Exhibit B: Apple Support suggests that importing the camera roll can improve sync times

Worst case, as @hobs mentions, you can restore your device as a new device from a backup (see this Apple Support page for details).

Try Process Explorer http://technet.microsoft.com/en-us/sysinternals/bb896653 and turn on the Columns for Performance > I/O History and see if you can visually see which process is doing a heavy I/O load (or none at all) in addition to the CPU troubleshooting you're already observing.

Also do you have iTunes 10.5 already? It significantly improved performance on Windows finally.