Failing Defrag

I’m trying to defrag a recently added 20GB HD, but each time I attempt to start it, an error message box apperas, asking to shut down other apps and free up more resources.
I have minimised tasks running to explorer.exe and that’s all. The original 4GB drive presented no such problems with only 64MB RAM. After I installed the new drive, with only the OS stored on it, I was having this problem. At the moment the disk is half full. I have only one HD with a single partition.
If its worth anything, I could defrag it when I was using it Win2000 Pro.

I’ve got 128MB RAM running on Win98SE on a Celeron 333.

Thanks