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What exactly is "INDEXing" a drive?

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what is does is create a "table of contents" type reference so that subsequent searches of our system for a particular file will hopefully be quicker, since the table of contents is smaller than the actual hard drive. That's why you can turn indexing off, and it doesn't affect the performance of your installed software, but it may cause a delayed search result when searching for a file in a large number of them.