Consider Login window as an example

Functionality Defect:

assume that you have given valid user name, invalid password and clicked on Login Button, in return if application has accepted you user name and password, and Main window is displayed

Then this is a functionality defect.

Usability Defects :

assume that you have given valid user name, invalid password and clicked on Login Button, in return if application has generated a validation message stating "Please enter valid user name" instead of "Please enter valid Password"

Then this is a Usability Defect.