I'll let you know when *I think* it finishes. I assume the only way to really tell is when I play an mp3 it actually shows 320kbps instead of the 1411(or something like that). I checked a few songs and they were definately not compressed yet.

Yes, the user interface works fine. I haven't noticed if the gears on the main page were still turning this morning, but when you goto the "about" menu and scroll to the bottom it tells you that audio compression is in progress along with the % of used spaced and the total amount of space.