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>Strange, I have 200GB free on my C: drive and 157 GB free on the drive where the database files are. The database is just about 10GB. Hmmm, this is the express version and I know that's the size limit, I wonder if that is why I'm getting the error.

Quick question - are you using SQL Express for production work, or is this a test development environment?

On the 99% - I am amazed you didn't get more catastrophic errors from SQL Server. When fragmentation gets that high, the overhead is severe and that probably explains much of the performance issue.