compressed files, formatting my hard drive (2 topics for the price of one)

ok i have a couple of questions:

first thing is, in window xp (and probably other versions as well) if you right click on a drive, there are two choices u can make:
index files for fast searching, or something like that, whatever thats not important
and compress files automaticly
i know that compressing them will save space, but what disadvaneges (if any) does this offer?

second question: i want to format my harddrive to clear up some space and have it run faster, and i heard somewhere ur supposed to format like every 6 months. its been way longer than 6 months since i got this computer, and ive never formatted. i have the origanal cd with windows and stuff on it that came with the computer, but that will also reinstall IE, microsoft works, etc, right? what files (other than data files/other stuff i want to personallly keep) should i back up? or is that a system dependent thing?

thank you in advance for the help

Don't reformat unless you are having serious problems. Run defrag, though, that'll speed your computer up a bit and is probably what you read. If you decide to reformat, the CDs that came with your system should restore the OS and the basic programs, but you'll want to back up any programs that you've installed that you need, any files that you have that you need, and stuff like that. A real pain that should be avoided if possible.

Compression will save space...but it's like a zip file. It will take time to compress, and take time to uncompress again when you need it, even though it's running in the background. Unless you have space problems, I wouldn't suggest it. If you have space problems, I'd suggest a bigger HD instead of compression. Or just delete the junk that we all have on our HDs.