Actually I have always been scared of using defrag. On a large drive it is an overnight job, and if the power goes out your system is pretty much screwed ... no? Please correct me if I am wrong here ...
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This was a bug in the early early early days of Win98, it's long since been fixed. Even back then it had to just happen while defrag was working on an important system file that it couldn't write back after it had read it. If you then tried to boot after that had happened, you'd be unable to because the file was missing.
Nowadays, defrag actually skips system files (they show up as green sections on your defrag, those go untouched), and, IIRC, it allocates an extra storage buffer where it copies the contents of a cluster before it starts altering its actual location on the drive.
So the power could go out, but you would be fine. Your disk would still need defragging ofcourse.
Haven't noticed any memory leaks myself (1GB of ram), but I haven't played that long or in very large galaxies. No leaks here at home, nor on my work comp (I love you guys for letting me install on two systems!)