How to compress files to save space in disc in vista

Right click on file (or directory, or disk) in Explorer. Select "Properties". For file or directory select "Advanced". Tick "Compress contents to save disk space". Click "OK" twice. If a dialog appears asking if you want to apply the compression to just the folder or to subfolders as well, chose the appropriate reply.

If the folder/disk is large it will take a while to complete. You can tell which files are compressed because they appear blue in Explorer.
 
There are plenty of free compression programs, 7zip among them, Google for more.
That said, it depends on which files you want to compress, these days there are not a lot of files that can be compressed by much.
The typical files that use a lot of space are, music, photos and videos. As these files are already compressed, there is little or no gain by further compression.
Best solution is to buy a new drive as they are very cheap now.