Trobert - sounds like the problem here might have something to do with CE-Star and PlecoDict not getting along. Which is a longstanding issue; PlecoDict essentially runs its own little Chinese enabler program inside of itself, so when CE-Star's is running on top of that there are a lot of ways they can potentially come into conflict. Did you install our software using the "Manual" or "Automated" install method?
Anyway, the first thing I'd recommend is that you exit PlecoDict completely (using the Quit command in the Dict menu) and then uninstall PlecoDict's Chinese font file; having it use the font supplied by CE-Star might help things work a bit more smoothly.
For the handwriting input problem, are you using the full-screen entry mode where you can draw characters anywhere in the definition area, or the one where you draw them in a little box at the corner of the screen? You can toggle between those two modes by tapping on the little downward (or upward) pointing arrow button in the handwriting recognition controls. So try whichever one you're not currently using and see if that improves matters.
Also, CE-Star actually includes a built-in handwriting recognizer which you could use instead of ours; an English-language instruction manual for CE-Star is available at
http://www.mobem.com/downloads/cestarsuit/wm5usermanual_eng.pdf if you need help using it. The company that makes their handwriting recognizer and the company that makes our handwriting recognizer are sworn enemies, so it's not beyond the realm of possibility that their two recognition engine libraries might conflict somehow, though I don't believe we've gotten any reports of it so far.
If you find that you can get things working well with CE-Star's handwriting recognizer and you want to uninstall ours (to save some storage space and further improve stability), the procedure for that is a bit tricky; you'd want to install a third-party file explorer utility like
Resco Explorer, go into its View Options screen, check the box/button to allow it to view hidden system files, then use it to go to the \\Program Files\PlecoDict folder on your Pocket PC and delete the file "PlecoHWR.dll". (all of this, again, after exiting PlecoDict completely using the Quit command in the Dict menu)
Oh, and re your other question, yes, you do have to go into the HWR screen each time you want to enter a character, though by popular request we're changing this in the upcoming Pleco 2.0 (which you'll receive as a free upgrade once it's available) so you can enter a bunch of characters at once.