I don't think this is a matter of your settings but something else causing the performance drop.
I've suffered from the same problem since the demo. I get a playable(but jumpy frame-rate) most of the time. Sometimes when I start the game I only get a slide-show(though it will eventually speed up to the playable frame-rate above if I leave it long enough).
It's not a matter of settings. I get the same performance and behaviour If I push all the settings down to low or ramp them all up to their max(not including SSAO).
I've managed to reach a point in the game where I need to run or hide from monsters, but the frame-rate is just to low to effectively close doors or move objects out of the way in a timely manner.
I've been trying to solve this issue for a while. A clean install of windows doesn't help. It effects 32bit and 64bit windows. I've only tested using 7.
It seems like disabling windows aero solves it. Which is strange as windows automatically does this when you open the game.
Turning it off manually seems like a good hot-fix.