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They seem like a fancy Praetor with the added down side of their Oath of Moment rule. Do they handle well on the table or just sit on a shelf, collecting dust?

In a world of Primarch's, no.

They can have their place on a Primarchless battlefield though. I've made a Nemean model, but I don't really use him. Just having 3 attacks, can be really limiting, though his other rules are pretty neat.

My local meta tends to have a lot of Primarchs and Fearless models, so... I need something with a bit more punch in my Warlord.

Does having a Knight-Errant limit using a Primarch?

I don't think so

Knights errant aren't bad if you make use of their special rules such as combining psychic levels and fnp.

It's a really decent way to get both in 1 go.

The only issue is their special missions some are easy but you don't want to risk needing to kill their warlord if it's a tanktribune Scoria or a primarch.

They're generally not super combat gods but they'll take on some equipped Consuls, and they're not super support monsters either, but your dudes will definitely have help.

They're great to lead big squads, particularly if they're going into combat. They'll turn a 20 man Assault squad from a decent unit to a strong asset in your army, and possibly even a lynchpin in an infantry heavy list.