If you are using Windows XP, chances are (as mentioned above) your hard drive uses the NTFS filing system. If you are in NTFS you can save space on your hard drive by using File Compression.

Note: If you compress a file using NTFS it cannot be encrypted or opened on a non-NTFS computer (Windows 95, 98, or ME) without first being uncompressed.

First, open My Computer and double-click a drive or folder.

Right-click the file or folder you want to compress, then choose "Properties". (You could also just right-click a folder or file and choose "Properties" or ALT+double -click)

On the General tab, click "Advanced".

Check the box marked "Compress contents to save disk space" then click OK.

Click OK in the "Properties dialog" box.

Choose the option you want when the "Confirm Attribute Changes" window pops up.

BONUS TIP: Want an easy way to distinguish your compressed folders from the regular ones? Why not have them appear in a different color.

Open Folder Options in the Control Panel, then Start / Control Panel / Folder Options.

On the "View" tab, select the "Show encrypted or compressed NTFS files in color" check box.