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I have an existing XP installation on a 160GB disk, with about 90 GB free.

I'm trying to install Windows 7 on the same hard drive, following directions from here.

The question is: How long should it take to run the "shrink" command, given the above parameters? How much space will that free up for Windows 7?

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It should only take a few minutes to shrink the volume. How much is can shrink depends on how long the longest contiguous portion of free space is available at the end of the volume being shrunk.

You can help free more space by defragging first, because this puts most of the files near the front of the volume.

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Apparently, if the defaults are more than what's available, it takes several hours - with little disk activity - before it reports the error condition. –  chris Jun 6 '10 at 0:12

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