Defrag window 2000 no enough free space

I am running a non-domain controller w2000 server. When I try to run defrag on the 5 GB system partition that has 1GB free space (25%) it tells me there is 25% free space 0% of which is usable by disk defragmenter. Delete some files and try again. I delete some files and it says there is 25% free 1% is which is usable by disk defragmenter??? Any thoughts. Be specific I am not to bright.