I am no expert but I'll give it a shot.
The above post is right: the MFT i.e. the Master File Table is the record of all files and their attributes on the volume (partition) including location of the files, and locations of each of the fragments if the file(s) are fragmented.
More info is herehttp://support.microsoft.com/kb/174619
In a nutshell
-NTFS initially allocates approx 12.5% of the volume for the MFT (quite substantial!). Once this allocated zone
is used up by the MFT, NTFS will automatically expand the MFT. Whether this expansion leads to fragmentation of the MFT depends on whether there is sufficient contiguous space adjacent to the MFT.
-Addition of a large number of files, particularly small files, can cause the MFT to grow. Very small files are stored within the MFT itself.
-Fragmentation of files on the volume can cause the MFT to grow since it has to store more information for each file.
-The MFT zone
can be written to by other files if necessary, but only as a last resort when disk space is <12.5%
-Once the volume gets filled up >87.5% then the chances of the MFT fragmenting increase. But even with more than 12.5% free space, the MFT can fragment depending on whether files were added and later deleted from the volume, and the file situation adjacent to the MFT zone.
-By default, the MFT only grows, and does not shrink; however defragging the MFT will rearrange the contents (if I am not wrong) and fill up the 'gaps' that once contained the records of the deleted files, thereby recovering the space. (need to double-check this).
-The MFT is the single most important file on an NTFS volume because each time a file is accessed, the MFT is accessed. Each time a file is updated/modifed/written the corresponding MFT entry is updated accordingly. If the file is fragmented, then the information has to be read for each fragment, slowing down the process. Similarly, if the MFT itself is fragmented, the file access is slower.
-There is a duplicate of the first few records of the MFT, called the MFT mirror. This is stored in a location 'away' from the original MFT, so that the volume can still be accessed if the original MFT is corrupted.
-The XP defragmentation API, developed by Microsoft and Executive Software (now called Diskeeper) has the ability
tp defrag the MFT. But the default XP defragger, or any of the freeware utilities, all of which use this API cannot actually utilize that ability ...why..I don't know.
-Only a handful of utilities can defrag the MFT. Pro grade defragmenters like Diskeeper (not DK Lite) can defrag most of the MFT from within windows, without requiring a boot-time defrag. I use Diskeeper 2009 Pro currently and I've noticed it doing this on a heavily fragmented volume; it also has a unique feature to proactively enlarge the MFT zone if needed to prevent it's imminent fragmentation.
-The MFT in a 3 or 4 fragments is not a performance problem. However, if it is severely fragmented, file access will slow down.
Hope this throws some light on the topic. Feel free to correct me if I have made any mistakes.
PS: haven't used the XP defragger in a long time, since Diskeeper has been running on automatic mode on my systems and I never bother with manual defrag. So I don't remember what the XP defragger used to do with system restore points..whether it was able to defrag them or not.