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It certainly works - look at these compression ratios: 85% for the Windows directory, nearly 90% for Program files (see the column on RHS below). It doesn't seem to affect performance at all (that I've noticed) although I suppose it may.
Note you only seem to get one shot at it so you want to install Office or any big programs before you run it. I'm not sure if this is by design but I don't see the compress option in Disk Cleanup after the first time (it is seen under the clean up system files section initially).
Last edited by adamf; 16 Mar 2015 at 16:05.