What if the catastrophic failure is a disk failure? The restore partition is of no use in that case.

Point taken, but if I have a disk failure, it will be a new computer and OS for me. Having come through Windows 3.1/95/98, FAT has a certain familiarity. I am puzzled why moving directories is such a risk in XP as I used to do it all the time when defragmenting 95/98 drives without any problems. XP seems to be designed not to work well with FAT32 (formatting large disks, defragmenting problems) but it seems strange that Microsoft would cripple the XP API compared with Win98 and that moving directories could become such a risk. I believe O&O Defrag will move FAT32 directories so I may give it a try.

Thank you for the advice. I am fairly sure of two things. There were no files created or removed during the defragmentation process and all the files showing as unmovable are not all folders. Doing an analysis with MyDefrag and hovering the mouse pointer over the unmovable blocks shows the names of the files and many of these are part of a large game called Company of Heroes, some up to 500MB in size. Could the limited amount of free space on the drive (11GB) have caused MyDefrag to designate them unmovable? The Acer computer was not supplied with an XP CD so the restore partition is the only way of restoring it to factory new condition in the event of a catastrophic failure, so I am reluctant to do anything that might render restore unusable. I am wondering if, with a quite full FAT32 drive, MyDefrag is not the right program for me to use.

There were no programs doing anything in the background that I am aware of that could have written files to the disk during defrag as suggested. Also, no files were deleted from the drive after defragmentation. The only program I forgot to disable was Windows Defender but I don't think that wrote anything to the disk. The drive was relatively clean before I started except I did not remove the old System Restore files. I am surprised MyDefrag is so sensitive to disk activity, as Puran Defrag say "Puran Defrag allows you to use your computer at full capacity even when defragmentation is running." I shut down my Realtime virus scanner, also my LAN and internet connection and I don't have any indexing, backups or autoupdates running. I am fairly sure the computer was doing nothing except running MyDefrag.

The disk has been left with a large number of supposedly unmovable files (not just folders) but there seems no reason why these should be unmovable. I did an analysis with Defraggler and this showed details of fragmentation remaining. Most noticeable were the Outlook Express .dbx files, all fragmented, many in 50 to 75 fragments. I defragmented these and several other files individually with Defraggler and OE is now much more responsive. Some less important files are still  fragmented in up to 100 fragments.

I tried MyDefrag because of the good revues and would like to use it. I don't think I can upgrade to NTFS as the computer is an Acer 1694 XP SP3 and came from the factory with FAT32, which I understand is necessary for the system back up on a separate partition to work. Is it being suggested that I shut down all processes and some services to use MyDefrag as I think this would be too much bother? Is the time of about 8 hours expected on a 35GB drive? Do you suggest I try running MyDefrag again or could I make matters worse? If files have been "locked" fragmented as suggested by ff_mfg, because of file activity during defragmentation, can these files be "unlocked" by running the program again? "Ugly" doesn't sound good.

Thank you but the huge fragmentation statistics come from MyDefrag's own log file not another program. Surely a fragmentation of 40% of used space is not an acceptable result after a defragmentation? I believe hiberfil.sys can't be defragged but I removed the page file before starting.

MyDefrag.log
Total disk space:      38,336,856,064 bytes (35.7040 GigaBytes)
Volume type:        FAT32

Unfragmented items:    14,896,463,872 bytes            86,512 items
Fragmented items:       9,849,602,048 bytes               943 items
Gaps:                  13,590,757,376 bytes             4,452 gaps
Average gap:                3,047,424 bytes
Median gap:                   163,840 bytes
Biggest gap:              533,037,056 bytes
Average end-begin distance:      294,328.6466 clusters

I used MyDefrag for the first time on a small FAT32 system drive of 35GB using the "System Disk Monthly" script. The process was slow, taking at least 8-9 hours and afterwards, the drive was much more fragmented than before, with the log showing 9.8GB fragmented and 14.8GB unfragmented. This is about 40%. An analysis by the Windows tool shows 32% fragmented and recommends defragmentation. There are now a huge number of "unmovable" files scattered all over the drive that weren't there before. The drive appears to be completely messed up and the process a total failure. What can I do to get my drive back to some semblance of order? Does anyone know of another tool that will properly defragment a FAT32 drive?