from a stock defy do the following(I just did the entire process for the first time earlier this week)
Root your phone using SuperOneClick(you will need to enable usb debugging mode for this to work)
install Defy_Recovery
reboot phone
once rebooted run defy recovery and pick the first option
it will ask for superuser permission, allow it.
wait for a pop-up that says install success
Copy the VwF extracted contents of the zip file from your computer to the root directory of your SD card
then reboot the device in recovery boot(the second option)
once the recovery boot comes up wipe the data as well as the cache.
Install RSD Lite and load this sbf file into it http://www.4shared.com/get/QhXX6PBw/JDGC_U6_0260_SIGNED_USAJRDNPRC.html
make sure your phone is connected to your computer and start RSD Lite
(This will upgrade you to Froyo but you want the new ROM as well)
follow the steps from the begining again until you get to the recovery mode again. Wipe the data and cache the go to backup and restore then restore and find the VwF folder. Restore it. after it restores, you will be back in the main recovery mode menu again. shut down the phone but hold the vulume up button to enter the bootloader again. this time load into RSD  Lite a sbf file that is titled Boot_only.sbf (or something similar, I can't remember where I found it either but it should be about 8.3mb) This will finalize the installation.
and Boom goes they dynamite, you're done!

I realize there are a few open ends but put some effort into googleing the stuff, like finding the superoneclick and defy_recovery files is not that hard to do, but if you run into problems let me know.

SUCK