A. You're seeing the confluence of two separate problems. The first problem is that Windows NT 4.0's management utilities (such as Windows Explorer and the command shell) can't accurately report the size of an open file. Thus, examining an .edb file won't show you whether the file has grown or shrunk unless you first stop and restart the IS.
The second problem is that .edb database files are like those little sponge pellets that expand into dinosaurs or birds when kids drop them in water—they expand, but they don’t shrink back to their original size. The IS is designed to not release space back to the file system because any space it releases it will likely need to grab back up at some point. You can force the IS to give up its free space by stopping the IS service and using Edbutil (for Exchange Server 4.0) or Eseutil (for Exchange Server 5.5) to do an offline defragmentation. However, if space is really tight, you should consider whether now is a good time to add more disk space.