Newb setup

Pardon me for being a newb, but I promise to learn as fast as any of you did. I want to make sure that I've got my steps in order before continuing. I've got 2 physical drives, each broken into partitions:
Dev0/par1: 10GB Win2k
/par2: 40GB FAT (for Linux/Win2k common files)
/par3: 60GB NTFS (additional Win2k storage)

Dev1/par1: 10GB (I WANT Debian/Knoppix HERE, new, unformatted now)
/par2: 500MB swap
/par3: 50GB games
/par4: 50GB media
/par5: 40GB Additional NTFS storage/software

I would like to leave my Win2k installation in tact, and if possible I would like to not lose any space by partitioning any more of it off.
From here, please check my steps to ensure accuracy:
1) dl Knoppix 3.6 for i386
2) Use Nero to make bootable CDs for Knoppix
3) boot from CD, run Knoppix installation

Questions:
Q1) I'm a bit confused on the instructions how to dual-boot, when do I run LILO/Grub, are those in the iso's/Knoppix installation I'm dl'ing? And do I have to re-partition part of my Win2k partition to allow LILO into the MBS?
Q2) I'm also a bit confused on how to properly install Knoppix on the hard drive (dev1/par1). I thought I read that my new Debian OS will continue to boot from CD after installing via Knoppix, but I don't see why anyone would want that, I want it all on the hdd.

If there's something missing or something I overlooked or misunderstood in my reading to date, please let me know.
Your assistance is greatly appreciated. If anyone needs Matlab help I'll bet I'd be happy to return the favor.

Your steps look OK, just burn the disk, boot Knoppix, install to HD using the command 'sudo knoppix-installer'. The install script should ask where you want to install Knoppix & give you a list of all the partitions it finds. It will call your first HDD /dev/hda and your second HDD /dev/hdb, so your first partition on the second HDD will be /dev/hdb1. 10G is lots of space to fit Knoppix, you could get by with less but no harm in having lots.
It should also ask which partition you want to use for swap & then format it as part of the install.
It will ask where to install lilo, default is mbr, just let it install lilo there. You don't need to create any additional space for it.
When installed, if you boot from the HD lilo will pop up first & give you the choice of Linux or Windows. You will still be able to boot from the CD if you have the CD in place when you start up. Sometimes this is useful as a rescue disk etc.
Once installed to HD you will be able to add or remove applications & customize your system as with any Debian system.

Ok, so I've been Linux and Windows and dual booting while I learn Linux. But I've run into a little problem. I've got 2 copies of Win2k, one on the first partition of my 120GB drive, which we'll call OLD2k; the second copy, a much cleaner one that I use for different functions, is on what I thought was the 3rd partition of my 160GB drive, which we will call Alive2k. (I say I thought it was 3rd partition because that's what it looked like in the Win2k Setup when I made the cut. But the LILO.conf says it's hdb6, and the boot.ini says it's "multi(0)disk(0)rdisk(1)partition(4)\WINNT", so I am confused, but I can work around that.)
So I told the LILO.conf to make the default as Alive2k, and I had a boot.ini file on there that listed both Win2k installations and was just dandy. However, after playing with the LILO.conf, I realized that the LILO boot information was on the 120GB drive MBR instead of the 160GB drive MBR, so I told it to move. Having done this, I don't know why, but the boot.ini file for windows moved from the Alive2k partition to the OLD2k partition. Now, in a sense, this isn't much of a problem. When it boots, I can choose the OLD2k, it reads the boot.ini, and I can choose which version of Win2k to run. However, if I choose Alive2k from LILO, it tells me there's some error loading the OS, and says Press Any key to Reboot. :(
Now, this isn't a problem so long as I make OLD2k the default for LILO, then the boot.ini file gets read, but I don't want to leave the boot.ini file on that 120GB MBR because in the event of losing or removing my 120GB... I wouldn't be able to load Win2k at all. I tried simply copying over the boot.ini from OLD2k to Alive2k, but that didn't work (I'm assuming it didn't copy to the MBR, but just somewhere on the Alive2k partition, thus nullifying its usefulness).
Please help.
I want my default OS to be Alive2k on the 160GB drive, which I did simply by editing the LILO.conf; but I need to know where and how to move the boot.ini file so that it loads properly without the 120GB drive being present.
Thanks so much for your assistance.

No help on the 'boot.ini' thing, I don't use win2K & I don't know much about booting windows.

But the hdaXX designations maybe this will clarify:

Linux calls each HDD hda, hdb, etc. Partitions are hdx1 for windows primary drive (usually C) then it gets different depending on how your drive is partitioned. Normally, with windows primary/extended partition setup, the primary will be hda1, the extended partition will be hda2 but any logical drives withing the extended partition (such as windows 'D" drive) will start at hda5. So for instance I have:
hda1 win primary (windows C)
hda2 'windows extended' partition containing logical drives
hda5 linux ext3 drive
hda6 vfat data drive (windows 'D')
hda7 another linux ext3 partition
hda8 linux swap