You can't turn it off, and really shouldn't want to. It's not running a full defrag, it's an optimizing defrag.
During usage, WinXP tracks how applications load. This first started with Win98 (or maybe Win95 OSR2) and FAT32. With Win9x it just tracked it in a file, and when you ran defrag, it rearranged files normally, but also rearranged files and parts of files based on what order they loaded when you ran the application that used them. So if an app uses the end of FileA first during load, the defrag would put that part of FileA in front of the rest of the file so it gets loaded first.
WinXP does this "optimization" anytime your system is idle. It only takes a short time, and each time it happens should take less time. Once it does it the first time, every app you've run already has been optimized, and each time it basically just tweaks it, or optimizes any new programs you ran.
Properly done 3rd party defrag programs honor XP's optimizations, and will not move them.