Windows Disk defragmenter does not defragment system files. A good tool PageDefrag at http://www.sysinternals.com/Utilities/PageDefrag.html can do this.
System Key: [HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\ Session ManagerMemory Management] Value Name: LargeSystemCache Data Type: REG_DWORD (DWORD Value) Value Data: "0" for Desktops; "1" for Servers