Okay, let's start with the basics. When you say Disk Defragmenter does nothing, I'm assuming that you're getting...
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no error messages or Event Log entries. The interface just sits there as if you never pressed a button. Does the entry in Task Manager show "Not Responding?" Does the analysis phase kick off then hang?
If you are getting an error message of some sort, let us know what you're getting. Otherwise, I'm inclined to think that you have a file corruption error of some sort. Try installing a second Windows 2000 instance on the machine into a separate partition. (The separate partition is important. There are common files outside the WINNT directory that are overwritten when you install Windows 2000.) See if defragmenter works from the alternate installation.
If it doesn't, then let us know what kind of I/O hardware you're running. SCSI or IDE? A special controller that might not have all the right drivers?
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