I'm not absolutely 100% but I'm pretty sure that defrag also rearranges your programs (exe's and associated files). I think that's what the "Rearrange program files so my programs load quicker" checkbox in defrag options is for. There's a folder in the Windows folder (I'm going off Win9x here) called Applog. I'm pretty sure this is where Windows stores info on your programs and which is used more often. I've seen defrag defrag pretty much entire drives/partitions that were still not apparently fragmented (no gaps till right at the end of the er... data - if any).
I once had a problem with defrag crashing and found something on the MS knowledgebase that had "delete the applog folder" as a possible solution. This didn't cure the crashes but defrag loaded lightning quick.
the rearranging isn't so much of an issue for me as my drives are partitioned. My games partition immediatly follows my OS partition (with swapfile on first partition (FAT16) of another drive on a seperate IDE channel). I reckon GP4 will overtake my other games within the next couple of defrags though. Also, in my experience, GP3 and 4 doesn't really need drive performance whilst playing, unlike F1 2002 I think (though I have got 512MB of RAM :D).