THis is from MicroSquish's Product Support Services:
NTFS Compression
NTFS compression is available on volumes that use the NTFS file system, and NTFS compression has the following features and limitations:
* You can use NTFS compression to compress individual files and folders, as well as an entire NTFS volume.
* You can compress a folder without compressing its contents.
* You can work with NTFS-compressed files without decompressing them, because they are decompressed and recompressed without user intervention.
* You can display NTFS-compressed file and folder names in a different color to make them easier to identify.
* You may notice a decrease in performance when you work with NTFS-compressed files. When you open a compressed file, Windows automatically decompresses it for you, and when you close the file, Windows compresses it again. This process may decrease your computer performance.
* NTFS-compressed files and folders only remain compressed while they are stored on an NTFS Volume.
* You cannot encrypt an NTFS-compressed file.
NOTE: If you move or copy a file into a compressed folder, it is compressed automatically. If you move a file from a different NTFS Volume into a compressed folder, it is also compressed. However, if you move a file from the same NTFS Volume into a compressed folder, the file retains its original state, either compressed or uncompressed.
This was under, "Best Practices for NTFS Compression in Windows"
MORE INFORMATION
NTFS compression can cause performance degradation because a compressed NTFS file is decompressed, copied, and then recompressed as a new file, even when the file is copied in the same computer. On network transfers, files are decompressed, which affects bandwidth and speed.