Run an anti-virus program. You can download trial versions if you don't have one already installed. If you have an anti-virus program, make sure the signatures are up to date. One of the symtoms of having a virus is that your hard disk fills up quickly because the virus is creating files on your hard drive.
Also, some systems will not defrag if you have a screensaver. Disable any screensavers before starting to defrag.
Try Diskkeeper Lite from Executive Software (
http://www.execsoft.com/diskeeper/diskeeper.asp). It is freeware and I have found that it works better and more reliably than the defrag utility included in Win98.