Shut down all processes running in your tray that can be shut down... virii checker as well AND shut off the screensaver... THEN defrag. Defrag in safemode is not needed at all.
XP sux. If you want to spend $$ on software go get Norton Systemworks PRO 2002.
Going strong building custom systems since 95 and we run 98 so hard it squeaks and never have real problems with it.
Getting a clone and dumping the compaq is an idea tho.
