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Use something like fs_usage to see which of your programs is churning the disk. This is not the normal state of Lion; there are two system services (Spotlight and Time Machine) which can generate tons of background I/O through normal operation - I usually disable TM outright and make sure Spotlight ignores my development folder.

I'll check that out. Thank you for your suggestion. One thing I find strange though, this started happening after I upgraded to Lion. It wasn't like that when I was using Snow Leopard and both Time Machine and Spotlight exist in Snow Leopard.

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