Windows XP uses the NTFS file format. By it's nature it's more effecient than the older FAT32 file system. Defragging is not as necessary as it was with the older versions of Windows.
Now.
If you installed XP as an overlay to an older FAT32 system and did not do a full format and conversion to NTFS, then your statements are correct.
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Defragging to me is one of the most important maintenance features that is included with win xp. It's there for a reason and over period of time, your HD works so much harder as it the heads are seeking files everwhere. The inconsistencies are more wear and tear on the drive, shortening it's life and uttimately cause a HD Crash!!! By defragging regularly, the files are grouped into their perspective clusters the drive doesn't have to work so hard. The disk defragmenter included with windows is OK but I use a third party disk defragmenter and does a better job. Hope this helps.

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