Running ME makes system lag

Can you provide more details? See above (OS, CPU, GPU, memory). And also what is your workflow? Are you sending over jobs from PPro or AE? What kind of media and effects do you use? I will try to repro.

Was working just fine before the last update

What are your system specs (OS, CPU, GPU, memory)? How did you set up memory management? You should definitely try to avoid swapping to disk as this will be very slow.