I have a n Exchange 5.5. The priv.edb went over it's limit. I manged to delete a lot of mail to bring it down to about 12GB, ran an offline defrg (eseutil /d) which completed successfuly but did not compress the database so clients cannot connect. Please help Thanks

You have to allow online maintenance to complete before running the offline defrag

If you have more one exchange home server, I would suggest you to move all the user on the problem DB to other exchange home server; the task move only value email data to database; the fregement left in problem DB. After the movement, the old DB can be safely deleted, then you can move back these users to balance the exchange home server loading.