I have that problem too and I could never figure it out. I use some 3rd party software instead like Norton Speeddisk and it is definitely better than WIn9x's defragging program. Now I use w2k, but I still wish to know the answer too.
Best thing you can do is eliminate as many programs that are running in the background as possible. Sometimes those quiet little nuisances are writing to your hard disk. Also Dont allow any screen saver or automatic shutdown features to be running. If your disk is heavily fragmented it's going to take a long time.
I think what is happening is normal. If you look at the details screen you will see that the apparent delay is only about five seconds from the point where it says 10% completed. If background programs write to the hard disk the process restarts but quickly catches up to where it left off. If you defrag the boot up partition often (once a day) the process for win98SE files and program files will take less than a minute or two. (Assuming data files like mpg's are in a different partition). BTW WinME has a very fast defragmenter.
don't worry it is using microsoft time. that has no relation to real time. when you install win 98 it claims 30 mins at the start my record from typing setup to being able to run programs is 8 mins. what do you guys have?