I don't believe leaving knoppix up, is hard on your hardware any more than leaving any os up. The only hardware that would be affected any more is the cd-rom. Even then the cd won't be spinning up the whole time. It only spins up when the os calls for something off the disk. If it sits idle for long periods of time the wear is minimal. BTW if wear is an issue consider this, cd-roms are considerably cheaper than hd's.

as for your first ? I would make a persistant home directory as DuckDodgers recomended. That way you can install the mplayer or real player once and forget about it. You would still be booting from cd.

PS. why don't you rebuild the MBR or reformat the hd and try to make it bootable? Did this happen when you tried to install a second or third os?