I have a server that has under 1 gig free space on the C drive. When I compress files, I end up with less free space, not more. I've tested compressing different folders and get the same results.
I started with 842 MB free space on the C drive. I compressed a folder that was 784 MB. After compressing it I had 139 MB free space. The statics on the compressed folder showed size = 784 MB and size on disk = 522 MB. I should have gained over 200 MB. When I uncompress the folder, I have the 842 MB free again.
I tested compressing the D drive and got the same results.