System De-fragmentation helps you to occupy unused space that remain blank at the time of data storage. As system doesn't store data in sequence,that's why we need to De-fragment the drives to use the blank space, it also makes system faster.
Blue screen means BSOD and its usually a hardware error that may be occur because of loose connection of data buses with hard drive. Make sure all the connections are connected properly. As this is the part of Computer support so it will be better to take some guidelines with experts.