I have the exact same problem, but on only one of my hard drives it seems to be a problem with large numbers of small files in the gz and stg file's on my system which come from a CVS file store. I noticed that when I defrag my C: drive I have no problems the cpu is about 50% utilised however all my partitions are ok Except for one drive which contains many millions of tiny files such as *.stg *.xml *.btg all around the file size of between 1kb to 100 kb sizes. then the program seem's to get overwhelmed it causes extreme lags on my system and 100% cpu usage. I have had problems before with these particula files so I started archiving them and accessing them from dvd iso images which seemed to solve the problem at least in relation to defragging my hard drive, so most of the data such as simulator scenery data is now stored on DVD to avoid the problem.
However the data I now have on my hard drive is dynamic and must be updated on a regular basis via CVS Updates using Tortoise CVS and theirfore burning this data to a disk is not an option for me, My only option is to store this data on its own to a dedicated partition so that it does not get mixed with other important system files or large files, that need regular defragmentation to be done. Perhaps the Authors of Defraggler can look into why this is happening ?
All the best Chelley