It’s not “training an AI model on screen contents without consent.”
It is a stupid feature for Google to enable by default: likely what’s making OP’s machine useless is that it’s running an OCR inference model on the OP’s images to index them for search.
Go to chrome://flags and disable “Enable OCR For Local Image Search” and I bet the problem goes away. The AI Service does have a few other features, but that’s the one that’s likely to be cooking the machine.
As for the other comments on this thread, I doubt there’s anything to do with GDPR here. It’s all local.