what's wrong with this conf file?

The server is dual Xeon with 4Gb RAM and 10k RPM RAID 1.
There is no workload, we are running test conversion hence autovacuum
off. I tried with on too, to no avail. Pg version is now 8.2.

Here's my pg sql config file, unabridged.

hba_file = '/etc/postgresql/8.2/main/pg_hba.conf' # host-based
authentication file
ident_file = '/etc/postgresql/8.2/main/pg_ident.conf' # ident
configuration file
external_pid_file = '/var/run/postgresql/8.2-main.pid' # write an
extra PID file

port = 5432 # (change requires restart)
max_connections = 100 # (change requires restart)
unix_socket_directory = '/var/run/postgresql' # (change requires
restart)
ssl = true
shared_buffers = 512MB
work_mem = 1024MB
maintenance_work_mem = 1024MB
max_fsm_pages = 300000
checkpoint_segments = 60 # me: increased from 3 based on warnings
effective_cache_size = 2048MB

stats_row_level = on

autovacuum = off # enable autovacuum subprocess?
autovacuum_naptime = 120min # time between autovacuum runs

datestyle = 'iso, mdy'

lc_messages = 'C' # locale for system error message
lc_monetary = 'C' # locale for monetary formatting
lc_numeric = 'C' # locale for number formatting
lc_time = 'C' # locale for time formatting

escape_string_warning = off

Here's my actual database schema up to names
taskcomments_csv table has ~10mil rows, id - sequence-bound identity
column taskid - bigint, usernick - varchar(40), and comment - text.
Index on usernick.
taskcomments table is the same but has userid int instead of usernick
and is empty, index on userid.
users has 7k rows, nick varchar(40), id int.

THe following query:
"INSERT INTO taskcomments (comment, userid, taskid)
SELECT comment, users.uid, taskid FROM taskcomments_csv
INNER JOIN users ON taskcomments_csv.usernick = users.nick

ran for 9 hours before I killed it, taking 1Gb RAM, 95% CPU in ps -eo
report and doing some painfully slow (~1Kb per several seconds) HD
writing in df output (e.g. it's not a HDD bottleneck). Obvisouly
explain analyze is not an option, explain for select predicts a
runtime of less than an hour.

There's virtually nothing else running on the server.
There's no workload on the database.

Can someone tell me what is wrong with this and what do I fix? Or how
else do I diagnose it?

I understand I can do it via updates within the same table and that's
what I am about to do, but for other tables that is not an option
cause as I have already learned dropping a varchar column after
conversion and running vacuum full to get rid of its data could take
days.