Yup.
System restore points, especially in Vista, continue to take snapshots, even while you are defragging (part of Volume Shadow Copy).
I believe the currently suggested fix is as you stated or simply disabling System restore, restarting, defragging, re-enabling System Restore and immediately making a new restore point (all previous points are lost).
PITA, but until MSFT provides a way for folks to pause it without losing restore points...what can we do?