I've been delaying doing a defrag because it takes at least 3 or 4 hours with
an 80 GB hard drive that's half full. This simply forces the issue. Also,
I'll try SilverFast after the defrag and maybe Photoshop will work and I
won't have to do all of the reinstalls.
If I'm reading you correctly you have one hard drive and only one partition on that drive. Like Windows Photoshop creates its on swap file (called the scratch disk - temporary work area). Usually when Photoshop throws up a memory error its because the scratch disk is full and not because of real memory issues. Unfortunately the message is erroneous - the Photoshop scratch disk REQUIRES contiguous hard disk space of approximately 5 times the actual amount of ram on your computer. Typically the memory error means that your hard disk doesn't have the required amount of contiguous space left. Normally this results from the way Windows throws files around the hard disk. Quite simply massive hard drives don't solve the problem if we don't properly manage the data. Having 50% spare capacity on your drive is meaningless if that 50% is made up of tiny chunks spread like pebbles on a beach.
To solve your problem I would partition your 80Gig drive into at "least" four partitions. One of these should be dedicated to the Photoshop scratch disk. Given that you are working with pretty large files I would and have done on my own computer set aside 20Gig of space for the scratch disk - NOTHING else should have excess to this partition. Every time you close down Photoshop the scratch file will be cleared so defraging isn't an issue. SilverFast also has its own scratch file and again it should point to an area of contiguous hard disk space - I usually just pint to the same area as Photoshop - 20 gig is a pretty big beach when only Photoshop and its plugins use it.
As for your other software and data (including the saved Photoshop images) put the on the remaining partitions.