to defrag your drives, empty them and then fill them back. so if u wanted to defrag your F drive, you would ftp all the data from the F drive on to your PC, then erase everything off the F drive then ftp the data from your F drive back to your xbox.
but why are u worried about defragging your xbox?
and i think u can install apps in the C drive, u just need to configure evox or what ever dash u use to recognize the game/app in the C drive, but i wouldn't recommend it. the c drive is for system files so u should just leave it like that.