You don't need to remove RAM to reduce the amount of memory Windows has available - you can configure it via msconfig (Boot -> advanced options) or bcdedit.

NTFS is supposed to be more resistant to fragmentation than FAT, and I'm not sure it actively needs defragmented. However people have become so used to it from previous versions of Windows that it's something Microsoft have to provide - there was even an outcry over the fact that Vista's defrag utility didn't provide a detailed progress dialog to let people see how much improvement was being made.