mmdiag.exe is a process belonging to Musicmatch Jukebox.
Musicmatch Jukebox is a multimedia application supporting most know media formats.
Non-system processes like mmdiag.exe originate from software you installed on your system. Since most applications store data in your system's registry, it is likely that your registry has suffered fragmentation and accumulated invalid entries which can affect your PC's performance. It is recommended that you check your registry to identify slowdown issues.