1. This was just discussed here http://www.knoppix.net/forum/viewtopic.php?t=16938 . There are lots of similar topics you can search for and also documentation available through the top of this page.

2&3. At a minimum you need root (OS) and swap. I would also add /home in case you need to reinstall. That way your files and settings stay intact.
This is what I would do but change according to your needs:
30 GB , XP , NTFS
20 GB , storage , FAT32 , both XP and knoppix can read/write to vfat and in case you need to resize the XP partition you can resize/remove this and extend NTFS.
6 GB , Knoppix root aka / , ext3 , should be plenty
500 MB , swap , basically 1GB - RAM , but minimum 100 MB
10 GB , /home , ext3
the rest , storage , ext3

4. Is the chipset also AC97 or just the codec. Post the output of lspci -v . Have you tried the alsa cheatcode?

5. Have a look at cheatcodes

6. Look at the Documentation and search this site.