That's very interesting, thanks for the feedback. Were you online or offline at the time? If the exclude is not in the Settings.MyD then does it help to be online or offline? I see a service called "Offline Files" in the service manager, does it help to turn that off just before running MyDefrag? On the internet I see that offline files are stored in a folder called "C:\Windows\CSC", was MyDefrag slow on that folder or somewhere else? And on which Windows are you, XP, Vista, what?
I am wondering what exactly is happening inside Windows there. I don't know too much about offline files, I've never used it, but I think they are copies on your computer of files on a network disk? And if you change them then the changes are automatically copied to the network. So, MyDefrag should not ignore offline files, because they take up space on the local harddisk.
Yes Offline files are stored in the CSC directory. What a lot of people do is enable Offline Files AND turn on EFS encryption on their MyDocuments folder. What this does is ensure that the user has access to their files while away from work, but also that they are encrypted as well. So if the laptop is lost or stolen, the files aren't accessible unless the thief knows the user's login credentials.
I don't think its the Offline mode but rather the EFS which is causing the issue. I'm hoping your change to open the files like JKDefrag does resolves this issue (and maybe others)