Does compressing files in XP slow things down?

I frequently run the Disk Cleanup tool and let it compress old files. However, one of the directories it compressed, full of small icon images, is terribly slow. Is this a result of the compression or something else? (Note: No other directories are slow at this point, but I also haven't come across any other directories that were compressed this much by XP)

Compression usually has an impact on the CPU. If you compress a lot of small files, it's even more taxing. It's normal behavior, in my opinion.

For instance, if you copy 1024 100kB files, it's going to take a whole lot longer than just copying one 100MB file. There's an overhead for each file; the same is true when compressing.