The K&N will not cause problems. There's a reason why all performance enthusiats use it. The biggest problem that you will get is possibly a clogged MAF in which rubbing alcohol will fix that very quickly.
To convert your car to stick, you will need a flywheel, clutch assembly, pilot bearing, throw out bearing, bell housing, trans, cable, pedal assembly, adjusting mechanism (stock or fire-wall style), shifter, boots, and all the little things that go along w/ it. It can be done, but will cost you and will take time.
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