[DougBTX]

> Why is this an invalid approach?

One way to structure a compressed file is as a lookup dictionary. To decompress the file, you'll need to agree on which file is to be decompressed. If you need to have an agreed OS installation to act as a lookup dictionary before decompression can happen, by all rights you should include the size of the OS in your total of how large the compressed file is.

If you want to use an arbitrary OS, the "decompresser" would need to be able to identify the correct fragments. If you can do that, in less space than the original files, you've already managed to compress the data!