I would like to know if there is some file in which hdparm settings are stored so that DMA is turned off *permanently*
I am not sure about this one though you may try out....
"hda=nodma" at the LILO boot prompt after "linux" or whatever label that you have choosen.
e.g, LILO: linux hda=nodma
if this works then you can add the following line to /etc/lilo.conf
append="hda=nodma"
.....and rerun `lilo'.
*Yes* Disabling DMA affects Disk read/write performance.
*BEWARE* I am only hypothesizing!! (oooops) Please read the kernel documentation. I am currently running kernel 2.2.14 (yeah, I know, has a bug). I don't have the kernel-docs on my system right now. You could get more (definitive) info under /usr/src/linux/Documentaion/*