Wp7.1 emulator on windows 8 machine will run with reduced performance if Hyper-V service is running on machine. Wp7.1 Emulator runs the phone OS in a virtual machine more like Virtual PC. Hyper-V adds another layer of virtualizations slowing down Wp7.1 Emulator.
If you targeting Wp7.1 emulators, please turn off Hyper-V to have improve Wp7.1 Emulator performance.
How to Disable Hyper-V feature
Restart the machine. Great Every thing now works fine and smooth!
NOTE. Wp8 emulators are based on hyper-v technology and hence hyper-v needs to be turned on again while working with Wp8 emulators.