Dude, defragmenting alone never speeds up the system. You need to take care of various other factors as well. Firstly, RAM is too low for your needs (CAD). But let's not talk about that.
Try these tips:
1- Clean all temporary files from your hard drive on a regular basis. You can use
this software.
2- Disable all unnecessary programs from starting with Windows. Start -> Run and type "msconfig" (without quotes) and disable unnecessary apps from the Startup tab. Also, in Windows XP, disable all unnecessary services. Here's a good guide:
http://cybercoyote.org/software/serv-comp.htm
3- Optimize your system using
Tweak-XP.
4- And finally, if your system performance is very very slow compared to the time you first installed Windows, I recommend you reinstall Windows.
And as for your question on Excess allocation,
Q) What does "Excess Allocation" mean?
Ans) The file is one that is being held open by the kernel. In addition it is being written and rewritten on a regular basis by the kernel. At some point in its lifetime, it WAS large enough to require 2 extents' worth of allocation. However, since then it was rewritten from the beginning with less data AND NEVER CLOSED. Since the file is being held open, NTFS figures it might have more data written into it at some time in the future and doesn't release the extra allocated clusters...leaving them assigned to this file for possible future expansion. The excess clusters will be released when the file is closed, which, unfortunately, will be the next reboot.
Source:
Diskeeper FAQ