John,
Windows Defender is spyware protection *only* and does not protect against viruses.
MSE is a full virus and spyware protection program. it will disable Defender on Vista/7 or remove it from XP. They will conflict if they are both running.
If you plan on using MSE, do NOT have any other AntiVirus program installed or running. Ensure that either, Windows firewall is turned on or that you have another firewall installed and Win Firewall is turned OFF.
On this computer I use Comodo Firewall and MSE, with SAS (SuperAntiSpyware) and MBAM (MalwareBytesAntiMalware) for weekly scans.
On one laptop I have Comodo Internet Security and Windows Defender as Antispyware software.
dave