Defraggler leaves Windows 7 files unconsolidated?

I am using Windows 7 on my netbook. I have tried it without, & now with Windows 7 Service Pack 1.

The problem I am having is that over time, if I used say, Defraggler to defrag the drive (1 pass, 2 passes, 3 passes, 4 passes, 5 passes, etc) I could not partition the drive like I wanted!

This is BAD! It indicates some files are NOT being moved (consolidated) together to create contiguous free space!

I have a 160 GB drive on my netbook, along with a dual-core 1.66 GHZ processor.

I was only able to get a 300 something MB partition available after running defraggler, or even multiple consecutive passes of defraggler...

I was appalled to find out that as much as I like defraggler, the Windows 7 built in defrag utility consolidated it all & I was then able to create a partition well over 130 GB on my 160 GB drive!

Please, please....

Fix this! I want defraggler to do good also!

Thank you, thank you, thank you!