You asked
Can you wipe your hard drive with KNOPPIX? ...
When you install Linux on your PC you can specify the size of the partition. It sounds like you're just trashing XP entirely, and going with Linux.

A better choice would be installing Debian, which Knoppix is based on. Knoppix is designed as a live CD, and apparently tends to break down when being updated.

You can re-partition your HD with Qpart, but again I strongly suggest that you install Debian, if you're kissing Windows good-bye (Of course this would also involve kissing all documents, files, programs, etc. good-bye - it seems a drastic step to me)...