@ your scalding yourself NZ!!!
You do need to lanolise - either with a premade lanolin stuff or with solid or liquid lanolin (underthegooseberry for solid, or bumfluff for liquid).
Either follow the instructions on the wool cure (NOT wool wash), or put a small teaspoon of lanolin in a pasta sauce jar (or some other container) with a squirt of baby shampoo, melt it with some very hot water, and shake vigorously so it all melts n mixes, then mix it with cold water so you end up with enough water to cover the shorts at about 30C.
leave em to soak overnight, then either roll in a towel and leave to air dry, or put them on a gentle spin cycle in a pillow case, and leave to air dry.
Afetr that either wash them in olive soap, wool wash, or baby shampoo.
Wash and relanolise once a week for the first 3 weeks or so, then after that they only need washing when they start to retain a smell, and relanolising once a month or so.
Can't fix the hole for you though - me n knitting don't mix!