MS SQL 2000 Database

You should be able to tell SQL Server to do that automatically. Open SQL Server Manager and go to the database you want to compact. Right-click that database and open "properties". Click on "Options" and then make sure the Check-box "automatically compact" is set (it may be a different wording, depending on the language).

If that doesn't work for you, you could consider creating a new database and then restoring a dump.

You can shrink/compact a database by using SQL Enterprise manager and right clicking on the database that you would like to shrink/compact and choosing All Task, Shrink Database. If you prefer T-SQL you can use the command dbcc shrinkdatabase followed by the database name.