Nictis would like to spend 3,000gp to upgrade his +1 Dagger to be a +1 Defending Dagger.

Then please add +1 (+1 Defending Dagger) to his Armor Class, Touch AC, and Flatfooted AC.

Processed but do bow and dagger stack?

Bows cannot have Defending on them. It's melee weapons only.

A defending weapon allows the wielder to transfer some or all of the weapon’s enhancement bonus to his AC as a bonus that stacks with all others. As a free action, the wielder chooses how to allocate the weapon’s enhancement bonus at the start of his turn before using the weapon, and the bonus to AC lasts until his next turn. This ability can only be placed on melee weapons.