Question : Exchange Defrag and Windows Defragmenter?

My Exchange 2003 stores are in desperate need of defragging but I do not have the disk space available to do this.  When I run the ANALYZE option using WINDOWS DISK DEFRAGMENTER, the results show an almost solid red bar.  

I have setup a iSCSI drive on the Exchange server that points to a 4TB NAS.  My test of defragging a small, test, message store was successful (the store was moved to the iSCSI drive and defragged over the network).

I do not want to permanently move the message stores to the iSCSI drive  I only want to temporarily move the stores to the NAS for defragging and then move them back to their original location on the Exchange server.

Question:

If the Exchange drive is so fragmented that it appears as a solid red bar in DISK DEFRAGMENTER, will this really be improved once the defragged databases are moved back to the fragmented disk?

It almost seems like it would be a good idea to run the WINDOWS DISK DEFRAGMENTER as well while the defragged databases are still on the NAS - before the defragged databases are moved back.

My reasoning is that Im unsure of the behavior of moving freshly defragged stores back to the Exchange server when the disks are showing as severely defragmented.  Im wondering if the drive will still show as being severely fragmented even after all the work is done.

Which is makes me wonder if it would be a good idea to use WINDOWS DISK DEFRAGMENTER on the local disks in question while the database are on the NAS  before they are moved back over.

I know that running WINDOWS DISK DEFRAGMENTER is a bad idea in regards to using it with Exchange, but am unsure if this would still be the case were the stores not present on the drive during the WINDOWS defragging process.

Below is the frag report.  Please let me know your opinion on this.  Thanks.

Volume Data (D:)
    Volume size                                = 257 GB
    Cluster size                               = 4 KB
    Used space                                 = 237 GB
    Free space                                 = 19.53 GB
    Percent free space                         = 7 %

Volume fragmentation
    Total fragmentation                        = 49 %
    File fragmentation                         = 98 %
    Free space fragmentation                   = 0 %

File fragmentation
    Total files                                = 260
    Average file size                          = 983 MB
    Total fragmented files                     = 224
    Total excess fragments                     = 28,350
    Average fragments per file                 = 110.03

Pagefile fragmentation
    Pagefile size                              = 2.00 GB
    Total fragments                            = 1

Folder fragmentation
    Total folders                              = 27
    Fragmented folders                         = 3
    Excess folder fragments                    = 655

Master File Table (MFT) fragmentation
    Total MFT size                             = 68 MB
    MFT record count                           = 484
    Percent MFT in use                         = 0 %
    Total MFT fragments                        = 2

Fragments       File Size       Most fragmented files
14,926          128 GB          \Exchange\mdbdata\priv1.edb
5,573           53.97 GB        \Exchange\mdbdata\priv1.stm
2,036           17.08 GB        \Exchange\mdbdata\Mailbox Store 3.edb
1,072           8.27 GB         \Exchange\mdbdata\Mailbox Store 2.edb
953             5.80 GB         \Exchange\mdbdata\Archiving Mail Store.edb
870             10.84 GB        \Exchange\mdbdata\Mailbox Store 3.stm
651             4 MB            \Exchange\mdbdata
489             3.76 GB         \Exchange\mdbdata\Mailbox Store 2.stm
268             2.55 GB         \RECYCLER\S-1-5-21-1887705946-1659309787-1543857936-1752\Dd2.TRN
113             13 MB           \logfiles\ENTEXCHANGE.log\20081201.log
98              10 MB           \logfiles\ENTEXCHANGE.log\20081202.log
92              11 MB           \logfiles\ENTEXCHANGE.log\20081209.log
90              11 MB           \logfiles\ENTEXCHANGE.log\20081118.log
90              10 MB           \logfiles\ENTEXCHANGE.log\20081125.log
79              11 MB           \logfiles\ENTEXCHANGE.log\20081117.log
72              12 MB           \logfiles\ENTEXCHANGE.log\20081216.log
70              10 MB           \logfiles\ENTEXCHANGE.log\20081124.log
70              10 MB           \logfiles\ENTEXCHANGE.log\20081212.log
67              10 MB           \logfiles\ENTEXCHANGE.log\20081215.log
65              9 MB            \logfiles\ENTEXCHANGE.log\20081121.log
64              11 MB           \logfiles\ENTEXCHANGE.log\20081217.log
58              10 MB           \logfiles\ENTEXCHANGE.log\20081208.log
58              11 MB           \logfiles\ENTEXCHANGE.log\20081203.log
55              9 MB            \logfiles\ENTEXCHANGE.log\20081205.log
50              10 MB           \logfiles\ENTEXCHANGE.log\20081119.log
49              10 MB           \logfiles\ENTEXCHANGE.log\20081204.log
45              9 MB            \logfiles\ENTEXCHANGE.log\20081126.log
43              11 MB           \logfiles\ENTEXCHANGE.log\20081120.log
42              10 MB           \logfiles\ENTEXCHANGE.log\20081210.log
38              5 MB            \logfiles\ENTEXCHANGE.log\20081213.log

Answer : Exchange Defrag and Windows Defragmenter?

Rereading your OP - just to confirm - I do think that you should defragment the drive after moving the databases.  IOW, my recommended steps would be (1) move each database and defrag it using the eseutil.exe; (2) at the same time defragment the drive using the Windows defrag utility; (3) move the defragged databases back to the drive.  It may not be absolutely necessary to defrag the drive with the databases not present, but it certainly wouldn't hurt. Depending on how much free space is in the databases, you may also significantly increase the free space on your drive.