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The Windows NT filesystem (NTFS) supports compression, which mean that one can mark a single file or a folder of files to be compressed. When NTFS compresses a file, then it chops the file up in small fragments and compresses each fragment.

• NTFS compression supports quick random access, because it can easily look up the right fragment.
• NTFS compression can slow down streaming access to files if CPU power is limited, but else NTFS can increase disk performance because decompression is often faster than the hard disk.
• NTFS compression can fail if the file is very large (beyond 100 MByte), because the it has to split the file into many fragments.
• NTFS compression should not be used on files that are already in compressed state like archives-files (ZIP, RAR, etc.) and media-files (MP3, AVI, etc.).

Windows 2000 extended the Cleanup Wizard to automatically compress non-critical files, that aren't accessed frequently. Over time this should lower the disk space required by the Windows installation. If disk space is critical on the install partition, then one can trim the installation size by activating NTFS compression manually.

Folders on Windows XP:

• C:\Windows\ServicePackFiles - Used by Windows File Protection to make sure that when installing new components then the latest install files are used. Can avoid the directory if installing Windows with the latest service pack slipstreamed.
• C:\Windows\$hf_mig$ - Used by Windows Installer to ensure that when installing new Windows Updates, then it will keep the latest version of the install files in case two updates tries to update the same file.
• C:\Windows\$NtServicePackUninstall$ - Allows Windows to uninstall a service pack without needing the original install CD. If not planning to remove an installed service pack, then one can remove the uninstall option and save disk space.
• Other things to consider for freeing disk space:
  • Limit the space for System Restore Points
  • Clean Temporary Directories
  • Limit the space for Temporary Internet Files
  • Disable Hibernate File
  • Uninstall unnecessary Windows Components

Folders on Windows Vista:

• None
• Other things to consider for freeing disk space:
  • Windows Vista SP1 File Removal Tool - Vsp1cln.exe (Is included with Vista SP1)
  • Remove media sample files (music and movies) installed by default with Vista. Open Media Player and browse the Library of Music and Movies to delete them.
  • The Windows Side By Side folder (WinSxS) should not be touched, as it is a solution to DLL Hell by giving the ability of having the same DLL in multiple versions. The folder is completely system managed, and the size of the folder is a bit misleading as it contains NTFS hard links to files in other directories. Windows will regularly purge the directory for obsolete files/links, so the size of the folder will grow and shrink dynamically.