I have not encountered this issue before, and I tried to follow your steps but did not get the same performance issue. For the system I am testing on, it is all on the local machine - both SQL and PI AF Server is running on the same machine and I'm using the PI System Explorer on the same machine as well. Also, I am assuming in Step 3, you meant the second element instead of the second template since both elements were created without a template.
What version of PI System Explorer, AF Server and SQL Server are you using?
Are you working from a new/clean database? I am wondering if the database you are working on has a lot of elements and hierachy of elements as this might also affect the performance.
Yes, I meant "second element" rather than "second template". Thanks for the correction.
System Explorer: 220.127.116.1165
AF Server: 18.104.22.16866
Not sure about the SQL Server version since I don't have access to the server at this moment, but it is probably 2012
The database is new and contains only 3 or 4 elements