I am using a 249 megabyte drive as a backup drive on my xp system. I have it formatted in NTFS and compressed, yet the size of the drive is still the same as before I compressed it. Why?

Actual disk size cannot be changed. By applying the compressed attribute to the volume, you instructed the operating system to try to compress any object placed there.

If an object placed on the volume can be compressed, the operating system compresses it and it takes less space on the drive than the uncompressed version. Thus more free space is left on the drive for other data.