Because of the need to have a single connected space for temp files, with some Win versions if your drive gets badly fragmented there may not be a single piece large enough for the OS and programs to function efficiently.

Defragmenting defrags the free space just as it defrags the files, putting all, or most, of the free space in one continuous bunch of clusters. This can significantly improve how well older Windows versions run, and can have some effect even with WinXP. WinXP is much less demanding about where it's temp files go, but even with WinXP there are a few things that work better if certain of the temp files are all in the same lump.

Hard drives are "rated" by several different parameters. A read/write speed (or time) gives an indication of how quickly the drive can move data to and from the recording medium when reading/writting a single cluster or a few closely adjacent ones. Another critical number is seek time, which tells how long it takes the "heads" to move from where they normally sit when idle to an "average location" where something might be located. The seek time is generally a whole lot longer than the time needed to read or write a cluster and move directly to the next cluster.

Typical desktop drives allow the heads to "hang" over the disk, so that a next read/write requirement is unlikely to require them to move too far. Typical laptop drives nearly always "park" the heads off at the edge of the disk during each "idle" pause between data transfers, so that the heads can't slam into the disk if the laptop gets moved or dropped. Thus the heads have to come all the way off the parking location (the slow seek time) for nearly every data transaction. Two drives with identical "numbers" can appear a lot different when used in these two different ways.

Since the laptop is already agonizingly slow when you're used to good desktop performance (even if the two machines have identical "specs"), it's reasonable to take a few additional pains to keep it as good as it can get, and that probably includes fairly frequent defragging.

With a desktop drive, the slightly slower drive response from a moderately fragmented disk isn't likely to be noticed, although if fragmentation gets really bad some decrease in performance may be felt.

With older Win versions, as mentioned, even moderate fragmentation of the drive that contains the Operating Sytem can drastically reduce the usable temp file space, even though the total amount of free space on the drive isn't changed, so more frequent defragging is indicated for those systems, especially if the total free space is a bit low.

A separate partition, or drive, that contains only data generally isn't harmed by a bit of fragmentation (within reason) because Windows doesn't keep going back to the potentially fragmented "original" file much once it copies it to the temp file that it actually uses to run the program.

As pavane notes, defragging doesn't change the amount of free space; but if the OS requires free space that's all in one contiguous group of clusters it can significantly increase the "usable temp space" available to the OS. One file fragment dropped in the middle of an empty area of the drive can cut the usable temp space in half on some older systems.

John