We are finding if the server has client version 12.1 mp1 it holds 3 folders of definition files which are all around 350mb in size, then when the new definition comes in it is another 350mb in size then when it is done unpacking and doing its magic it cleans up the oldest def if working as designed. Our issue is we have some servers with low disk space and this extra 350mb causes alerts for us and is annoying.

First = Are definition folders supposed to be 350mb in size? I dont ever recall sav8,9 or 10 being that large.
Second= Is there a way for us to tune down the registry to only keep 1-2 defs?

See this:

Configuring the number of content revisions kept by the Symantec Endpoint Protection client

http://www.symantec.com/business/support/index?page=content&id=TECH103956

i have seen that article, wondered if the 350mb per folder is by design or are the defs supposed to be smaller when they are delivered?? 

AV defs are typically 75-150mb but all content definitions will cause it to be higher.

There's a possibility that the defs may have got corrupt.

How to clear out definitions for a Symantec Endpoint Protection 12.1 client manually

These are the definition cache and by default, they are 3. Each folder is around 400MB (150MB uncomppressed). To solve your problem, upgrade to latest SEP12.1 RU1 MP1 or wait till RU2 is release (soon). The new version has only one cache, not 3. And it is not configurable as before.

i am already on 12.1 ru1 mp1 on the sepm server, are you talking about updating the clients to that version? most clients are on 12.1

It should be on the client where it has 3 cache folders

what should?