A process called Service Host: Local System is using up all of my laptops resources

YES!!!

You must open services.msc and disable the following:

background intelligence transfer service (BITS)

Windows update

update orchestrator

A couple things I didn't see in any of the responses so far (although I didn't read all of them) which you might want to check:

• Is Windows downloading any updates? Go to Settings area and check to see if it's in progress downloading the updates it does periodically (this was happening for me--had to install three updates that were downloading)
• Did it download an update and it wants to install it? Reboot and you'll know if this is the case. (And it's always a good idea to reboot anyway, especially if you're experiencing abnormal activity on a PC.
• Do you have any cloud storage services like Dropbox or Google Drive which are sync'ing? Check their status in the system tray (bottom right corner where all the little icons are). After I did my Windows updates, I had to pause Dropbox, which was downloading a lot of files I had added through my work PC the previous day). Between this and my Windows updates being up to date, my drive usage became normal again.
• Are any of your security programs (anti-virus or other similar services) performing scans in the background? This can also be seen in the system tray.

If you're checking something in the system tray to see if it's running a service, you can often just mouse over it and it will tell you what it's doing. 

Also, you can often pause these for a while and then check your Task Manager to see if that freed up your harddrive. Allow 2-3 minutes for the service to gracefully pause.

I'm on a Windows 10 machine and it's a desktop, but the above things would apply to any PC.

i strongly advise you AGAINST this solution

This will delete all your WiFi settings and internet passwords for them

Hi Bharat_47.

I am glad to know that you posted query in Microsoft communities.

From your description I can understand that your computer is running slow.

I need to ask you a few questions in order to assist you in a better way.

1. Have you install any recent Windows updates on your computer?
2. Have you made any software changes to the computer prior to this issue?
3. What is the name of Antivirus program installed on your computer?

Could you please try the following methods to resolve the issue.

Method 1:

Run a system file checker scan check if that helps.

Refer the following steps to run SFC scan.

a) Move the mouse pointer to bottom left of the screen where you see preview of start menu and Right-click to bring up a list of Windows settings.

b) Click on ‘Command Prompt (Admin)’ to bring up elevated command prompt. Note: Click ‘Yes’ if it prompts for permission.

c) In the command prompt type in the following command:‘sfc /scannow’ and hit enter.

Method 2: I would suggest you to perform clean boot and check if any third party application is causing the conflict. Please follow the instruction mention in link below and check.

http://support.microsoft.com/kb/929135.

Note: After you have finished troubleshooting, follow these steps to boot to normal startup.

a) Press the ‘Windows + R’ key on the keyboard.

b) In the ‘Run’ windows type ’MSCONFIG’ and click ‘Ok’.

c) On the ‘General’ tab, click the ‘Normal Startup’ option, and then click ‘OK’.

d) When you are prompted to restart the computer, click ‘Restart’

Method 3: I would suggest you to perform a virus scan on your computer.

Note: Any data files that are infected may only be cleaned by deleting the file entirely, which means there is a potential for data loss.

Please follow the link mentioned below.

http://www.microsoft.com/security/scanner/en-us/default.aspx.

Hope the above information helps.

Do get back to us and let us know the status of the issue by your next post or in case you need further assistance.

Or maybe we can put it in this way of theory...

Someone is getting the data out from MY computer. along with  Service Host: Local System (Network Restricted 8-7-10 etc...) other closed apps begins to run out of nowhere. Lets not forget Service host also had Data sharing in its details. When I stopped Data Sharing "Host process for settings synchronization" started to run. Microsoft Office suite began to run *I had it completely down* "YET" *IT RAN* WITH some data bla bla written in it(I don't reckon the program clearly*. Huh, now something else is running.

before you say me bout viruses... I know how to use a PC, from head to 'knee'. I've been cautious about viruses and didnt install any services lately. browse from trusted place, visited "trusted sites" including microsoft.com.

Can I get an insight on how to completely stop anonymous data from passing on? ah yea, I did stop every known app and software from sending usage stats to its maker.