I recently compressed my C Drive and I cant seem to defrag any better than 7 fragmented files and 16000 excess fragments. Before I had compressed I would have gotten those excess fragments down to maybe 300 or less. Any idea how I can improve the fragmentation ? I am using diskeeper lite (free version).

WHY IN THE WORLD did you COMPRESS your drive. Windows XP doesn't like that much.

To answer your question, use the paid version.

This does sound a trifle obsessive compulsive. It may not be what everybody thinks is the best defragmenter but the Windows defrag is at least competent.
Like raybay sort of said, a compressed file is a modified file, do it at your own risk. I leave that box unchecked, it never, ever seems like a good idea.

considering the enormous capacity of most HHD drives today, your fragmentation is quite low. Bear in mind, you'll hardly get 0 fragmentation due to temp files etc,... unless you use more sophisticated techniques like moving temp, swap, and page files to another drive and/or partition.

I would say you're doing fine. Windows defragger is known not to be the most efficient, but it works. If you want better defragging programs there are a plethora of them out there both commerical and FREE.

I wouldn't fuss over any % smaller than 10% You really won't notice an improvement.