Sounds like the drive was on it's last legs to begin with. How old of a laptop was it?

Defrag might've just pushed it that extra step to say "Fuck it, I'm dead", as defrag does move data physically around on the disc. I would suggest try both Hiren's Boot CD and Ultimate Boot CD (legality is the only real difference between them).

Other than that, maybe running a Live CD for Ubuntu, Puppy Linux, or somewhere in between would get something for ya, but it's no guarantee.