The reason is probably pretty trivial: older Defraggler just by chance happens to modify the drive in such a way that the Shadow Volume subsystem doesn't use up too much space for the system restore point. It's a sheer coincidence. Newer Defraggler does the modifications in such a way that Windows uses up significantly more room for the restore points, and removes the old ones much quicker. What you're experiencing is a designed-in "feature" of Windows with unintended consequences. There is nothing, zero, NADA, that can be "fixed" on Defraggler's side. If you don't like it, you can completely disable system restore for potentially significant gain in defragmentation speed, and use a third party backup solution instead. I mean, you do backup your system to physically separate storage on a fixed schedule, right? Right? If not, your problems are bigger than lack of System Restore!
A way to work around is to maximize the amount of space that can be taken by System Restore. This only has a chance of helping you if you have plenty of room on your hard drive (say 50%+).
