Can you still play defy with Empowered blue Mel out

Yes, you can still play Defy — but it won't actually counter anything. A spell that "can't be countered" (from an Empowered Mel, Newly Awakened) is still a legal target for Defy, since it's a spell on the chain with the right cost; "can't be countered" is a prevention on the counter action, not a targeting restriction. On resolution, the counter instruction is skipped as impossible (Rule 358.3.a, Rule 54 "can't beats can"), so Defy goes to trash and does nothing, and the protected spell resolves normally.

Note this only applies to spells controlled by Mel's controller while Mel is Empowered. If Mel isn't Empowered — or if the spell belongs to a different player — Defy counters as usual.