I have submitted the following to Microsoft support:
"I run Windows 8.1 on both my main PC and my laptop. The issue I am facing is with my main PC. Since the online update to 8.1 from Windows 8, I cannot defrag my main disk (c:). Windows is reporting it at 16% fragmentation and growing. When I run the defragmentation utility, it goes through pass 1 and suddenly stops reporting again the same fragmentation. If I run defrag from the elevated command prompt, the process stops reporting "The parameter is incorrect (0x80070057).
I have run chkdsk and sfc utilities but no luck. There is plenty of free space on my disk (more than 50%).
The issue seems to concern many users - see related discussion in http://answers.microsoft.com/en-us/windows/forum/windows8\_1-performance/cannot-defrag-my-computer-since-installing-windows/d5440a3e-8b3b-4b46-9f48-58d361f27bb3
Please give us a solution."
When I receive a reply I will post back to this thread!