Could you tell more about your tons of fragmented files?
\Documents and Settings\Cindy\My Documents\Downloads\MSSetupv96.exe is 2.19 GB and in this case it will be fragmented as that size is too big and will always be shown as Red in Disk Defragmented.
\System Volume Information\_restore\xxxx is your Windows Restore and will be remain there for back up.
Disk Defragmenter does not defragment files residing in the Recycle Bin or files that are in use. In particular, this includes the registry, page file and hibernation file.
You could read this.
http://en.wikipedia.org/wiki/Disk_Defragmenter_(Windows)
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