I think you are confused with point #1. There are versions which can be installed into the windows fs, like phat linux. Linux is an operating system, you don't run it as a program in windows.
However, there is a system called cygwin which puts a unix-like layer onto windows. Maybe thats what you are thinking about. It sounds the closest to your description.
For #2, you are talking about knoppix.
[ August 24, 2003: Message edited by: M. O'Brien ]