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 (http://support.microsoft.com/kb/922379) 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.