I just checked and you are right, this chip does run quite hot compared to others in its class.
If heat isnt the issue, then you need to find the cause by testing each component.
You dont need to reinstall windows, this just shows that you dont know how to actually solve the problem and you are just guessing.
Do a fresh install of traktor with no controllers. Use the default root directory, and do not import your collection.
Do a fresh install of the Z1 and drivers.
Load and analyse 100 tracks you have bought from legit sources that you know are uncorrupted.
Set those 100 tracks on cruise mode and wait to see if the lag occurs. If it doesnt, then start adding other pieces to the setup and testing one by one.
If its not your controllers or traktor configuration, then its likely a driver or service causing a real time latency spike which leads to dropouts. This is hard to troubleshoot technically if you dont have a lot of pc experience as it involves disabling services, drivers and editing the registry.
Heres something i just googled to get you started.
[REQUIRED] Check for DPC spikes indicating problematic device drivers or conflicts and resolve the problem(s)
If the audio output has intermittent glitches or crackles but the CPU load seems to be low, you must check your DPC latencies to see if there is any problem. Even if your real-time audio is fine, we recommend that you check your DPC latencies anyway to root any possible problem out.
If you have DPC latency issues, it means one (or more) of your device drivers introduces delays that interfere with real-time audio. Some drivers are faulty, others are just poorly coded, whatever the cause you must detect the problematic ones.
There is an excellent free 3rd-party tool called “DPC Latency Checker” and an explanation of the problem available on this page. Read the page, download the tool and execute it while the audio is running.
If your system is subject to this problem (indicated by yellow or red stripes when using the latency checker tool), first make sure you got the latest version of all your drivers (video, audio, network, usb controllers, any peripheral, etc) If the problem persists, you’ll probably have to disable the faulty devices, at least when performing music.
To determine which devices are faulty without blind guessing you’ll need a second free tool called “LatencyMon” and available here (note: this tool doesn’t run under Windows 2k/XP) Run the tool alongside the audio application and mark all drivers which have a value superior to 1 in the “highest execution (ms)” column.