RAM is temporary memory.
HDD space is for the most part permanent.
Defrag % has nothing to do with free space. To check your space right click your C:\, clic Properties and check the pie chart. It should also list free space.
If you have tons of old stuff you no longer want, go on a cleaning spree. Elsewise, get a new HDD. I'd suggest internal, but external is fine, I got a cheap 200GB HDD for 120bucks, now they cost a lot less, like 60~80 for 200GB? You can get internal 500GB HDD Seagate Barrucada 3.0GB/s transfer rate(Very speedy) for only 130bucks~
An important thing to know when you use 2 HDDs is that you should have all programs and your operating system on one disc (C:\), and all of your FILES on a seperate HDD (D:\, E:\, or w/e). It makes your computer run a lot faster ^ ^;