I had a similar problem for several months. I have an HP Pavilion 7940 running Windows ME. In March I upgraded my McAfee protection. After that my disk defragmenter and scan disk programs stopped working. I hadto take my computer in for service after it froze up.
The technical support guy suggested something that worked for me.

I had to tun off my virus protection / personal firewall program at the start up. I think these programs keep the hardrive busy and Scan Disk and Defragmentation programs like the hard drive to be at rest.

Did you try Start/ Run / msconfig, re set to selective startup and click off everything and then re-start?

Once it starts up it will say that you are using selective start up.
I found that when I did this my hard drive sat quiet enough for disk defragmenter to open. My defrag program found a problem and suggested I run Scan Disk first to clean up the problem. I did that on normal Scan Disk setting and then disk defragmenter, but it still had an error message. So I ran Scan Disk on thorough setting [where it also scans the entire disk surface]. The Scan Disk process took 3.5 hours, when it was done it found several files and cleaned up the problem. I was finally able to run disk deframgmenter - which took 2 more hours.

Then do not forget to reset msconfig back to the original setting and re-start.

I hope you can Disk Defragmenter to work this way.