See the defrag and scandisk troubleshooters located here:
http://home.satx.rr.com/badour/html/how_to.html

How large is your hard disk?

I suggest that you remove Temporary Internet Files ( including Offline
Content ) and History. Start Settings, Control Panel, Internet Options,
General, Temporary Internet Files, Delete Files, check Offline Content and
click on OK. Also empty  your Recycle Bin. This helps remove a potential
problem when running Scandisk and Disk Defragmenter.

I would then run a "thorough" Scandisk in Safe Mode. For Options see that
System & Data areas is selected. Then click on Advanced and see that you
have selected:

1. Display Summary -Always.
2. Log file -Append to Log
3. Check files for -Check all three options.
4. Report Ms-Dos Mode name length errors

There is an option to Automatically fix errors which I would check but many
computer buffs do not preferring to investigate the error using the log
before attempting to fix the problem.

When you have successfully run Scandisk run Disk Defragmenter in Safe Mode.

To start Windows in safe mode Click Start, and then click Shut down. Click
Restart, click OK, and then press and hold the CTRL key until the Microsoft
Windows 98 Start-up Menu appears. For some machines, you can use F8 instead
of CTRL to bring up the Microsoft Windows 98 Start-up Menu. Enter the number
for Safe mode, and then press ENTER.

Notes In safe mode, Windows uses default settings (VGA monitor, no network,
Microsoft mouse driver, and the minimum device drivers required to start
Windows). You will not have access to CD-ROM drives, printers, or other
devices.

I have never had a problem running defrag in reg mode, it
is with scan disk that I have the problem.  Have always
run defrag first then scan disk - sometimes it will run
ok, others keeps going back to beginning.  Do a clean
disk, delete all temp files etc.