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Use a deep litter in your run and that will fix the mud and unhealthy soil problem. Do a quick search on this thread for posts by me and you can find several on deep litter in the run
I think that house may be a bit too small to put a strong-smelling item in the 4x4 area. Birds are very sensitive.... But you could place some in the run - though I don't know that it will help as that kind of repellent is designed to be used in small, closed-in spaces such as under the hood or in the cab of a tractor or in small rooms in cabins, etc. The key is keeping the space small and the odor strong.