I can help you..
long time defy owner. f***ed around a lot with it for putting a custom rom. i have wapied and installed and flashed roms on it on a daily basis cuz was just not happy with something I put. and I read a lot. and didnt understand half of the steps. its all so complicated. but its also quite easy. I stuck to the superoneclick and 2ndinit recovery method. so not a lot of roms could be installed. I downloaded like 6 or 8 different roms. out of which only 3 or 4 could get installed. out of which I liked 2 but 1 one was laggy.

you must know that the defy has 512mb ram. so whatevr you put or dont put is not gonna make a ton of difference cuz that is just too little ram. I only use my phone for simple things and still it eat 75% of my ram.
so before you begin, read up on roms (they are operating systems) and pick what you like best and download that. then we can go about installing that.

also know that none of this recovery and installing roms works with android 2.1. so you will have to replace (flash) that with 2.2 and then work your way up. also try not to put Jellybean. doesnt run smoothly on the defy. I tried. you can go upto ICS imo. but pick a rom without too much unnecessary apps that you think you dont need. I basically use my phone for music n to feel cool about my self that I have a touch screen phone.

I currently run Miui ginger bread rom and I have deleted most of the unnecessary apps but still it takes 75% of ram. I picked MIUI cuz it looked good and I managed to put an ICS looking theme on it.. n this is what I got

http://imgur.com/Zgmcy
read up a bit on this .. maybe it will help.. http://forum.xda-developers.com/showthread.php?t=1216982

yup i wrote 'flash' in brackets which meant that you need to flash it. if you read up on it you will eventually find sbf files to flash. it doesnt matter which country 2.2 sbf you will flash as long as the language you can read cuz you will be putting a costom rom eventually. but the 2.2 is your starting point. you need to get there first.

get rsdlite and defy drivers and install them on yr pc

download froyo stock sbf file.

backup your contacts and messages. i dont know how to do that

download titanium back up or app backup and restore to back up your apps.

now power off your defy and switch it on by pressing volume down key and power button to get into stock recovery mode. it looks like a triangle with an exclamation mark and an android bot next to it. thats means yr there

now press your volume keys up n down to get into the recovery and navigate. look for option saying wipe data  and wipe partition cache. do both of them by navigating with volume keys and entering with the power button.

it takes a little while but it gets done.

now power down your phone and restart it again by holding down power button and volume UP key this time

this will take you to bootloader screen

nowconnect it to your pc with usb wire and open rsd lite and flash that sbf you down loaded.

let it do its shit and you will have 2.2 on yr phone.

if you encouter any problems with rsdlite like it saying pls manually switch on phone. just disconnect the wire. power down the phone, connect the wire and power on again.

get here first n we can go from there. use another phone for the time being.

here is a video too  http://www.youtube.com/watch?v=Vd9EjgvcbXY