For now, I'll just say that it is a reflection of the poor design of Windows (more on that some other time). What happens is that MS "locks" many many files that it uses (more on why in the defrag thread, later). If a file is locked, then the MS OS does not allow any program, inclusing Defrag, to 'touch' it. And defrag needs to not only touch it, but completely copy it, erase the old information, and rewrite it to a new location on the HD.

All the files (which are often fragmented themselves BTW) that are locked (there can be hundreds) not only are not defragmented, they are obstacles to defragmentation, and often will accelerate future fragmentation because they have chunks of themselves all over your hard drive... and these are all 'untouchable'.

1. Open Disk Defragmenter (Start - Programs - Accessories - System Tools - Disk Defragmenter).
2. A drive (volume) must have at least 15% free space for defrag to completely and adequately defragment it (for the XP built-in defragger).
3. Run defragger after installing new software, or saving lots of games.
4. Do not use more than one defrag program on your machine (e.g., don't use OO Defrag, then do an MS Defrag). Ironically, that will often just fragement your machine, or at least waste time and work your HD needlessly.