Cause of lag spikes / svchost.exe?

I know some things about computers, but I'm not a computer expert. I have a decent computer with 8GB of memory, and a GTX 960. I usually have Curse, Evolve, and Steam open. (I've had this for a while, but this year I upgraded it with a better power supply, GTX 960, removed the 4*2GB of memory, and put in one 8GB of memory)

I've been playing Terraria, it used to play fine, always at 60fps. But now I'm usually at 45fps, I would be fine with that but it often goes down to something like 10fps for short (but often) times (Steam's fps counter doesn't say there is a change, but it's obvious there is stuttering). I have a few ideas on what's causing the problem, but I'm not sure on what it actually is. At the times the fps starts to go up and down, task manager says memory usage is around 6.5GB-7.0GB and CPU usage is around 80%. Does memory/CPU have to be 100% busy to cause lag, or can it just be close?

A program called "svchost.exe" is taking up ~1.7GB of memory and a lot of CPU (I think? not sure what the CPU column means in the task manager but it was a high number compared to everything else). I've read that svchost.exe is a windows process, but some viruses might use that name and I don't know how to tell. And if svchost.exe is legit, then does it only take up resources that are not being used or does my computer's svchost.exe have a problem?

TL;DR: Does memory/CPU usage have to be at 100% to cause lag? Is svchost.exe taking up 1.7GB of memory and a lot of CPU a bad thing/a virus/fixable?

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