"Directory entries may be empty, indicated by an inode number of 0".
So if the pseudo-code is correct, this may be an utility to squeeze out those empty entries.
As for the sys write: my current hypothesis is that .. there is a placeholder for an argument which is written to by the preceding dac .+4. ('"If a program can't rewrite its own code", he asked, "what good is it?"'). But I can't make sense of what it's actually putting there - I'd guess length, but it looks like ~(dir - 2) + 8.
That took me a while. The ‘8’ in ‘tad 8' is the contents of memory location 8, i.e. the destination pointer in the memory copy, so it's ~(dir - 2) + dst. And since -x = ~x + 1 (there being no negation instruction), that works out to the length, dst - dir + 1.