select count(*) from mtable where day='Mon'

Results:

1. P3 600 512MB RAM MSSQL. It takes about 4-5 secs to
run. If I run a few queries and everything is cached,
it is sometimes  just 1 second.

2. Athlon 1.3 Ghz 1GB RAM. PostgreSQL takes 7 seconds.
I have played with the buffers setting and currently
have it at 7500. At 20000 it took over 20 seconds to
run.

5 seconds vs 7 isn't that big of a deal, but 1 second
vs 7 seconds is. Also, the slower performance is with
much lesser hardware.

Post the result of this for us:

explain analyze select count(*) from mtable where day='Mon';

On both machines.

Chris

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