In my VMware Windows XP machine (after I upgraded to SP3), I tried to defrag the hard drive (as I was cleaning up and preparing to compress the VMware drive file, etc.).  When I pulled up the Computer Management console and selected the Disk Defragmenter option, I pressed the Analyze button and nothing happened.  The button is active but nothing seemed to happen.  The same thing happened (or didn't) when I pressed the Defragment button.  When I tried to defragment from command line, I got the following message:

Windows cannot connect to the Disk Defragmenter engine.

When I googled this message, it indicated the defragmenter wasn't installed and I should install it.  However, the Microsoft article ( also indicated the defragment now button in the tools tab of the drive properties would be disabled - which it wasn't.

Regardless, I found the dfrg.inf file in the Windows\inf folder and right-clicked on it and selected Install.

After a few seconds, things seemed to be finished and now the defragmenter works.