When not to use NTFS compression
NTFS compression can cause performance degradation since a compressed NTFS file is first decompressed, then copied, and finally recompressed as a new file. In addition, compression can increase the fragmentation of your drive if frequent writes are involved.
As a result, you should only use NTFS compression on clients and not on servers. The only types of servers where it might be ok to use compression would be those where files are read but rarely written, such as Web servers serving up static pages to clients.
As a caveat, even on clients it's not usually a good idea to compress operating system files such as the system32 folder. Compress your data folder instead, but only if your data is relatively static. Or better yet, add more hard drive space since large hard drives are increasingly affordable.