Problem Records vs Defect Records - When and how use which/when

We are trying to use the Agile / SDLC module to track our development work against the platform, creating enhancement records and defect records, then creating stories and linking them to a release.

The process is pretty rough around the edges, but it is working for the most part.

Our current process is:

1. Incident received from end user.   Dev team troubleshoots and provides a workaround if possible.   Dev team creates an enhancement or defect record which is then reviewed at the next weekly meeting.

2. enhancement or defect record is approved or denied, and the end user is notified via their incident that the enhancement or defect has been added to the product backlog.   Their incident is then resolved (even though they may still be experiencing the issue or have a need for the requirement).

3. Stories are created for the approved enhancements or defects and are ranked / prioritized.

4. High priority stories are added to the next release and developed.

5. We manually track the relationships between the incidents and the approved enhancements or approved defect-fixes, and notify the end user when a release date is confirmed for their enhancement or defect-fix.

This works,. but I am curious of a few things:

1. We will want to introduce problem management soon.   How do problem records fit in with defect records???

2. What is the best way to give the user visibility into the problem or defect?   Should we add the user to the watch list for the problem or defect and then close out their incident?

What makes the most sense?

Id be grateful to hear anyones thoughts on the topic.

Thanks in advance!

- James