Ok for one thing it is dangerous to have too many files in the Root Directory C:\
Hopefully, Thor, that's not really what he meant. I think he meant that most of his files are on the C: volume. He can correct me if I'm wrong, but I doubt he's just saving files to the root directory. (Though nothing would surprise me.)
Dan, is your drive partitioned to more than one volume, or do you have physically separate hard drives?
Personally, I've never trusted compressing folders, but XP does it in the background all the time. My trepidation comes from memories of disk compression introduces in earlier operating systems to save space and horror stories of lost data. I would not
compress system folders. Don't compress commonly-accessed folders because it does slow things down a bit. When you open a compressed folder, XP expands the data. When you close it, it shrinks it again.
For your own personal files that you want to compress, you can even create a compressed folder, then drag your files into it. Just open Windows Explorer and click on File and then New and choose "Compressed Folder" - then you'll have a new folder ready to give a name. You can drag stuff into it or out of it. More
As long as you have an NTFS filesystem and not Fat32, compression is probably quite safe.
How large is the drive with your operating system, and how much space do you have left?