ojas:
You likely have some processes, services or applications running in the background that are keeping the disk defragmenter from finishing the job.
If FED's suggestion doesn't do it, try starting Windows XP in diagnostic mode:
1. Click Start > Run...
2. In the Run... text box, type msconfig and click OK.
3. In the System Configuration utility, choose Diagnostic Startup and click OK.
4. Restart Windows in Safe Mode and attempt to run disk defragmenter once again.
Let us know if that doesn't cure it.
Regards,
Doc