I was under the impression that the fragmentation that steam suffered from was all internal, as in inside files. Go to the steam\steamapps folder and check out some of the file sizes. Especially on source 2007 shared materials.gcf, source materials.gcf and source sounds.gcf.
These files contain data for all the sourge games you have. Get another one, or when one is patched, the data is added into those gcf files. This means that inside that file, the data can become gragmented as textures are added/edited/removed. Steam defrag defrags the data in these files, so no other program can defrag them.
At least thats how I believe it works :3