Whenever I enter the character creation menu I encounter massive amount of lag/fps drop. It's bad it takes me forever to do simple things like move my attribute numbers or select my alignment. Is anyone else experiencing this and does anyone else know how to fix it? Thanks!

Post your PC's settings and Operational System for us, maybe it will help the community help you.

Edit: Are you using the vanilla version of the game? I didn't played it, just gone directly to install the Co8 mod pack to solve most of the bugs and problems of the game, and installing the Temple+ mod afterwards resolved even the graphic issues that I had. Maybe intalling these mods, or at least the Co8, will solve your problems with perfomance.

The links:
Co8: http://www.co8.org/community/index.php?forums/the-circle-of-eight-modpack.54/
Temple+: http://www.moddb.com/mods/temple1

If I recall correctly and there was an issue with all the characters from the menu invisibly spawning in the same place which led to low frame rates since the game was trying to render them all. I'm pretty sure we fixed it with templeplus.