From the choices you have given, "doomed" is the option !!
But wait, things are not that bad. The way XP operates, files WILL be fragmented and scattered. Even if you defragment and place them the way you want, it will all get undone. It does not make a noticeable difference in normal operations as you have seen. The difference is noticed when you run a benchmark test.
What is more important is a bit of housekeeping - get rid of Temporary files and directories, Browser cache, etc. You have utilities that do this - Crap Cleaner is one of these.
There is also a Page Defrag from www.sysinternals.com that defrags the Page files - normal defraggers cannot.
Then you have a whole lot of Disk defraggers that defrags files - at least most of the fragmented ones.
Now, whether defragmenting files do improve performance or not has been debated quite a bit bit these forums. I believe they do, quite a few don't.
The final point is, defragment or not, XP will continue to fragment the files and scatter them!
Ramesh
I have a HP Mini Netbook and for almost one year I have been using it excessively until this month. One of the things I did was I kept the hard drive almost completely full. Now I have 16 external hard drives (and getting more) and have moved almost everything off of the netbook onto the external storage.
It has a 149GB internal hard drive. I am continuing to find things to move onto the external storage. So far the netbook has 50GB of free space.
I have opened Disk Defragmenter, and have noticed a catastrophe. The system files (colored green in Disk Defragmenter) are scattered everywhere. I have not noticed any change in performance as a result of the scattered green files. But there is only supposed to be two green rectangles in Disk Defragmenter, not a dozen. I do not want the system files to be scattered like this.
Is there anything that can be done? Will registry optimizers help? Will the system files eventually be moved to where they are supposed to be, by themselves? Should I uninstall drivers and then reinstall them? or am I doomed?

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