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NO it does not have to settle in, this is poor advice from a mechanic. A vibration concern where the tire is going up and down is a tire or tire balance related concern. A concern where the steering wheel vibrates is a steering concern with the steering rack or inner or outer tie rod ends or alignment.
Other causes of vibration can be a bad spring or shock (strut) You test your springs by checking ride height and you check the shocks by bouncing the car and seeing if it continues to bounce.
Knocking noises can come from the steering components or the strut components or mounts or the lower control arm mount or lower ball joint.
A replaced tie rod end should look like new metal or freshly painted metal with barely any surface rust.
WHen you take the tire off you will see the brake assembly and hub. This is all mounted on the knukle. Between the knuckle and the rear of the wheel opening is where the tie rod mounts to the knuckle. It should look new if replaced. I recommend you take it back and have them point to the part they replaced and prove its new.
Since you have had this knocking noise for so long you might also want to look in to a concern with a damaged axle halfshaft CV joint.