Good for you. I myself switched from Mandrake to Debian a while back. A switch I don't regret - though expect to spend some time doing the finer tweaks to get everything the way you want it.
1) Go with Testing (at the moment also known as Sarge). Keep in mind that Knoppix is not Debian, it's Debian-
based and use packages from Testing, Unstable, and some home-hacked stuff. If you really need exactly Knoppix, do a HD install of Knoppix. But I'd go for Debian Sarge.
2) Simple. Don't install Debian on the Windows partition. Sure, Windows may not show up in the bootloader (Grub) initially, but it hasn't disappeared. You may need to add the following to grub:
Code:
title My rarely used Windows XP installation
root (hd0,0)
makeactive
chainloader +1
(assuming that Windows is on the first partition on the first drive.)
Edit: Also, looking at the config files for Knoppix will give you good hints on how Debian should be configured.
Good luck,
/TLV