I've just installe Defraggler 1.21.209
On a mobile UBS HDD I defrag'd the drive and got some holes with free space. To eleminate them, I started a "Defrag free space", WITHOUT the "allow fragmentation".
That should close the holes without creating creating fragmentation - I expect that files are pulled together if there's nothing suitabe to fill in the gap. Instead of that Defraggler used a large file to fill in the gaps, by the way fragmenting that file.
I have not tried the procedure with "allow fragmentation", but maybe the menu entries need to be swapped ?