[Suicide Junkie]

Win ME, eh? I reccommend upgrading to 98 when you have a chance.

Daily defrag is almost certainly too much. Drives do have a limited lifetime, and grinding away day in and day out is not good.
Try monthly, or even annually depending on how much use and the size/free space on the drive.

Personally, I defrag in the "never" category. My files get sorted when I copy them to a bigger drive.