Here goes some quite aggresive suggestions.
Knight 1: move up 10 inches or so, to face the shades, while just barely not exposing the flank to the Dark Riders (that way we are sure to hit the shades next turn, which might cause us to pursue them into the little spear elf unit; if the dark riders charge us we hold, win combat and will most proberly pursue into the shades anyhow and break them)
All archers stay put
IC knights move forward by some 4 inches, (the minor witch may wanna get in range of our wizard), if so I think we should consider charging the major spear unit with both IC knigths and reiksguard and hope to erradicate both the BSB and the minor witch, in one glorious charge (it will cost us dearly but I think it might be our best option before we get even more spelled up), just make sure the dreadlord doesnt get to attack any of our characters.
Same for the reiksguard, move (not march) through the forest so the unit barely touches the magic circle aura but getting as close as possible to the large spear unit.
Knight unit 2. how far away is the 2nd dark rider unit, and how many knights would be in dif. terrain charging them?? See Stank 2,
Captasus charges the hydra
Stank 1, 3 pt on engine 1 pt on Sgun, hit the Executioners a little to the our left, no need to hit the champion.
Stank 2, if the steam gun is able to hit the Dark Riders we steam 'em otherwise move d 6 ahead onto the hill and the Knight unit 2 might charge them.
Finally for the mathlore of a full knigth front attack on the spear unit, we will lose about 5 knights, 2 to the dreadlord, and three by join effort of the hero, witch and 38 spear attacks. It only take the attacks of 4 knights and their steeds to take down the general, likewise 4 should suffice to take down the bsb and another three for the witch.. Our casualties will increase tremendously if our knights gets rusted or they spears gets enhanced. I think we really should consider this our best call, as time (magic) is not in our favour