What to Do in the Forest of Werewolves Part I

You are interviewing three inhabitants, A, B, and C, and it is known that exactly one of them is a werewolf. They make the following statements:

1. C is a werewolf.
2. I am not a werewolf.
3. At least two of us are knaves.

Our problem has two parts:

1. Is the werewolf a knight or a knave?
2. If you have to take one of them as a traveling companion, and it is more important that he not be a werewolf than that he not be a knave, which one would you pick?

(Source: What Is the Name of This Book? The Riddle of Dracula and Other Logical Puzzles by Raymond Smullyan)

The best way to approach this is to consider what it would mean for each of the three inhabitants to be a werewolf.

If A is a werewolf, then A is a knave and B is a knight. What about C? If C is a knight, then at least two of the three are knaves. But only one is a knave under these circumstances, so C can't be a knight. If C is a knave, however, then what he's saying is in fact true! C can be neither knight nor knave and so it's impossible that A is a werewolf.

Now we turn our attention to B. If B is a werewolf, then A is a knave and B is a knave. C can be a knight, because it's true that the other two are knaves.

But we're not finished yet! C could also be a werewolf. If so, then A is a knight, B is a knight, and C is a knave, because there aren't "at least two".

So, all told, it's entirely possible that either B or C is the werewolf. In either case, (a) can be answered now: the werewolf is a knave. Regarding (b): if it's of the utmost importance that one's traveling companion is not a werewolf, then go with A. He can't be the werewolf. Plus, assuming each possible state of affairs is equally likely, there's a two-thirds chance he's a knight!