It sounds like the obvious hasn't been stated.  Some inserts take over a second, but with 2m per day they all aren't.  Reads block.  Sounds like during the times when...

Two other things that have not been mentioned.

-- This fixes storage that gets corrupted in 2000.  2005 keeps track better

dbcc updateuseage( 'eachdb')

-- 2000 statistics could be bad also, update them

exec...

Use an update (UPDLOCK) lock on the select rather than a (READCOMMITED)

If the count doesn't need to be perfect use this instead.

select @BeginCount=max

Biggest impact for me was code that used "SET ROWCOUNT"

Below is the version I use for 2000

SET ROWCOUNT @NumDelete

delete --...