The dfrgres.dll file is not a registerable DLL (not all DLLs are registerable).
If you navigate to the inf folder and choose to Install dfrg.inf, what you will usually see is just a blink of the screen and nothing else which may make you think that nothing happened, but something did happen but it may not fix your unspecified problem.
I am not sure what you meant when you got stated...
You wanted a copy of defrag.exe for some unspecified reason (why did you think it was missing?) so if you expanded one from your installation CD into your c:\windows\system32 folder (assuming XP is installed on your C drive), you should have one now, right?
Then you said this and I don't know what this means:
It has been changed to Event Viewer somehow.
Describe what happens if from a Command Prompt in the c:\windows\system32 folder, you enter:
If you do not get a usage message, what do you see?
If you do get the usage message, enter this to analyze your volume of choice with verbose output, for example:
defrag c: -a -v
When you try to defrag from the XP Tools menu, exactly what happens - what got you here in the first place?