Just wanted to let you know I found a solution and all seems to work know. Here is solution.
Click Start, click Run, type regedit, and then click OK.
Locate and then click the following registry key:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Explorer\VolumeCaches\Compress Old Files
I could not find anything that was Compress Old Files---but after VolumeCaches it had something to due with office (cant remember exactly what---shud of wrote it down). After I did that the Disk Cleanup utility works like it shoud. And so far no other problem.
Again thanks for your help. I hope this helps someone else that has the same problems.
Oh yea could not find MSOcache in search.......