hindustani - below is the best way to knock your bat in. If the bat is pre-knocked in then you can probably get away with only 4 hours worth of preparation.
Assuming your bat is natural finish then you need to apply a light coat of raw linseed oil first. Do the face, edges, and toe, avoiding the splice. Back is optional.
Best thing to use is a bat mallet but failing that an old ball in a sock will suffice. Start off by knocking it in with a fair amount of force, move all over the face of the bat - don't concentrate on one area for too long. As time goes on increase the force you use to hit the bat. Near the end of the knocking in process you should be giving the bat a fair old whack.
After about 6 hours worth of knocking in, go to a net\outside and hit a few (newish) balls that are bowled at you. If the bat shows a lot of seam marks you need to knock it in for a bit longer. Continue to do this until you can play in the nets without numerous seam marks appearing (you'll always get one or two though).
Don't forget to knock the edges in - best way is to mimic the action of a ball hitting the edge - i.e glancing blows.
Optimum knocking time is for about 30/45 minutes per session. So it should take around about 7-10 days to fully knock in. The reason to take your time is that if you do it all on one go the wood fibres will spring back and negate the effects of the knocking in. By slowly knocking in you'll ensure that that the fibres stay compressed and give the best performance.
Anti-scuff sheet is optional, but don't apply one if you've already oiled the bat as it won't stick to the oil.
As for the difference between the two willows, then yes top grade English willow is far and away the best wood to make your bat from and you should always strive to buy it. However in all honesty, for the most part there is little difference between top end Kashmir and low end English willow (of which your cheaper bats are likely to be made from).