Create a new Registry import file named context_defrag.inf in Notepad (be sure to save with it with the Save as type set to All Files and not Text Documents) and place the following text inside:

; context_defrag.INF

; Adds Defrag to the right click context menu in Windows XP

[version]
signature="$CHICAGO$"

[DefaultInstall]
AddReg=AddMe

[AddMe]

HKCR,"Drive\Shell\Defrag\command",,,"DEFRAG.EXE %1"

Then, right-click and choose Install. This will add a context menu to XP that allows you to automatically defrag drives, using the command line version of the built-in defragmentation utility. To use it, navigate to a drive in My Computer, right-click, and choose Defrag. A command line window will appear, and that drive will be defragged (see picture 1). When it's complete, the window just disappears.

Picture 1

UPDATE: To remove this functionality, Open regedit.exe and navigate to the following location (see picture 2):

HKEY_CLASSES_ROOT\Drive\shell\

Picture 2

Then delete the Defrag folder and close Regedit.