XP Defragment Runs – but lots of red rem

I had to move off quite a few files from my mydocs. After this I have noticed that some programs (mostly Pinnacle Studio 8.0) isn’t running correctly. I cannot create a mpeg without the computer crashing – before moving the files it was fine. I have run scan disk and disk defrag. Disk defrag runs completely through but leaves tons of fragmented files behind and claims it cannot unfragment the mydocs folder.

AMD 2000, 60 Gig Hd, 120 Gig HD, 1 Gig Memory, AIW Radeon, XP Home Edition