You seem to have a lot of questions, so I will answer you in two separate posts.
I understand how it is sometimes with students at intermediate level. They feel that they are not making any progress. At beginner, elementary and pre-intermediate level, they learnt a lot of new things and progress was visible. They tend to plateau out at intermediate level. At this level, progress is not so rapid but knowledge is consolidated. A lot of the language studied at earlier levels becomes automatic, whereas they had to think about it previously. At intermediate level, there is usually more progress in skills work than in language work. Progress in skills work is less visible to students. You could point this out to your students and explain it to them. You could also do a skills activity or language exercise from the beginning of their intermediate course or from the end of their pre-intermediate course. By going back and repeating an exercise and comparing success now with earlier success, they will be able to see how much progress they have actually made.
As for error correction, I agree with you; it is pointless to correct every error. You can explain to students the difference between accuracy and fluency work in speaking activities. You can explain the goals of both types of activities and explain that you correct all (or almost all) errors when focussing on accuracy; when focussing on fluency, you just correct the most serious errors.
The next time you do a speaking activity, you could give three coloured counters (red, amber, green) to each student. Red signifies “do not correct anything”, green means “correct everything” and amber means “correct the most serious errors or the errors that hinder understanding”. Each student chooses a counter and places it in front of them. Make sure that you correct every single error made by the students who place a green counter in front of them. This will probably prevent them from producing a sentence without interruption. By correcting every error, they will realise that they don’t get the opportunity to say very much. Students usually end up by changing their green counters for an amber one. If somebody chooses a red one, they usually realise that they don’t learn much without teacher correction. These students often change to amber too. In any case, by using the counters, you are allowing students to make the choice. They usually appreciate the fact that they make the decisions.
I will write again soon with answers to your other questions.