I am looking into performance issues of a large C#/.NET 3.5 system that exhibits performance degradation as the number of users making requests scales up to 40-50 distinct user
Lock convoys are hard to debug in general. Does your code path have sequential lock statements either directly or in branches?
The Total # of Contentions performance counter gives a base estimate of contention in the app.
Also break open a profiler and look. You can also write some perf counters to track down the slow parts of a code path. Also make sure that locks are only being held for as long as absolutely necessary.
Also check out the Windows Performance Tools. I have found these to be extremely useful as you can track down lots of low level problems like abnormal amounts of context switching.