B

Step 1: Analyze Option A: A diode, when forward biased, allows current to flow through it due to a decrease in the barrier potential, enabling conduction, so this statement is correct.
Step 2: Analyze Option B: The packing fraction is defined as the ratio of the actual nuclear binding energy to the mass-energy equivalence. If the packing fraction is negative, it indicates that the mass defect is not sufficient to hold the nucleus together, meaning the element is unstable. Therefore, this statement is NOT correct.
Step 3: Analyze Option C: Binding energy indeed refers to the energy needed to separate nucleons in a nucleus and is equivalent to mass defect times $c^2$ (according to Einstein's equation $E=mc^2$), thus this statement is correct.
Step 4: Analyze Option D: Radioactive elements can indeed undergo spontaneous fission, which is the process in which a nucleus splits into two or more smaller nuclei along with the release of energy, thus this statement is also correct.
Therefore, the incorrect statement is B.