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I thought the W7 defragmenter did move boot files to the outside and that's what it's doing with the several passes it makes while defragging.
You are correct, this is why it takes longer than a 3rd party defragger. As for Paragon Hard Disk Manager. I have purchased their software for five years. It is very diversified and can perform complex HDD tasks. However, it's not for a novice user.
The WIn7 defragger can move System files in order to shrink more space? Are you sure about that?
The only tool I've ever found that does this is the offline system files defrag on PerfectDisk10 trial.
Free Paragon Rescue disk can recover deleted partitions and files. I also have their HD manager but find Partition Wizard CD does a better job for Win7 for free.