Norton 2009 is only anti-vitus/internet security. You need to say if you have a laptop or a desktop, also the size of the disk. With a desktop you can cheaply install a second disk to store your data, leaving the C drive just for programs.
Looks as if your disk is full of data rather than programs. If you look in my pictures, my videos, My Documents etc you can click on the top of the size column to find the largest ones. You should also start/search for *.PDF as these can be massive.
I would also suggest you load -
http://www.belarc.com/free_download.html - for free. This will give you a one page summary of your PC.
Do you have XP on CD? Have you installed the Service Packs? If you still have these as .exe on your PC you can copy them to CD and delete. Or did it come with MS Works and you are using MS Office? If you haven't got the XP disks you have potentially worse risks than not being able to defrag. You need to make sure you have copies of any data you cannot afford to lose.
Compressing old files is a last resort as it will slow your PC. Better to try saving space first.
Ken