Never defrag. Ever. A well used hard-disk is not a hard disk where all the files are chained one with the other, a well used hard disk is a hard disk that lets enough space after each file to ensure they will still fit in one single block would they want to get bigger some day.
I am not surprised that it fucked up your boot loader. Windows always assume it's the only OS installed on the machine. And don't use Norton products, they-do-not-work.
The best solution is to have networked machines, or better a server, and back stuff up everyday. I know pretty well how it feels when your hard disk dies without a backup at hand
