I still have a free trial version of 'Diskeeper Lite' (www.diskeeper.com) - it does not pack the free space, but only packs the fragmented files - the paid version is intended to run in the background (I'm using 98SE) defragging constantly.

If you run it manually - you have to do 'the vulcan nerve pinch' to kill it out of your background task list once you cease defragging - it hangs around anyway and slows the machine down if you don't kill it.