The "CD-ROM device with major ID 11 not supported" message is indeed because you use SCSI emulation on your CD-ROM. It's really no big deal (at least, it shouldn't be... I haven't tried any CD access, like installing HL, since I started getting it... maybe I should).
The "cannot find notepad" message is because in order to launch notepad, you can't just type "wine notepad". Wine doesn't know about a Windows path (so it doesn't know where to look for files to execute), and it also doesn't know that it should add .exe to the end of files to execute. You have to manually cd into the directory that holds notepad.exe (which on my setup is /mnt/windows/windows, the equivalent of C:\Windows), and run wine notepad.exe to run it.
I'll try setting up HL again tonight, to see what's going on.