The best approach, if the trees problem really is compaction, is to get somebody in with an airspade and break up the soil. In addition to that, we've had great luck using a product called Cambistat, which is some special juice that helps sick trees. Yes, the airspade and chemical treatments will run about a thousand dollars, but are your best bet, from the sounds of it.
If the tree isn't worth the thousand dollars to try to save, then you could try some home remedies. Instead of an airspade, rent a lawn aerator and run that around in an area about a hundred feet or so from the tree. Then get some bagged compost from the garden center and rake it around the same area. The idea is to make little areas of nice, loose soil for roots to go hang out.
You also want to reduce stresses on the tree. Water if you don't get rain for a week or so, keep traffic away from further compacting the soil, do not fertilize or weed kill under or near the tree. Do not use spikes and I don't even know what a reed bar is, but whatever it is, don't use it.
Make a mulch bed under the tree, but do not use herbicides or disturb the soil to remove existing grass. Tree roots are very shallow, do not hurt them. Simply lay a few sheets of news paper down, add a thin layer of compost, and then cover with 1 to 3 inches of organic material like mulch. The bigger the beds, the better for the tree. If you can make the bed extend out a bit past its crown, that's great. If you can go bigger, that's even better. The bed doesn't have to be round or unbroken, be creative, have the bed blend into the surrounding lanscape and include other nearby trees or shrubs.
If you can only do one thing, I'd try the cambistat. Rainbow Tree care has more information on it's site.
Put some pictures up and we can give you better information.