Originally Posted by
KingZ
Correct.
No, because in this case, "live" is a present form of the verb "living". You could say, "I wish my friends would eat nearer", because they're currently stuffing their faces and you want to hear the beautiful sound of them chewing.
However, to say, "I wish my friends would live nearer" doesn't make much sense because it isn't a current action.
Both incorrect. "I wish it didn't rain" means that you wish it never rained, ever. However, you wouldn't really say that in practice, because humans would die and you'd regret your wish almost immediately. If it rained last night and now you're pissed off about it, you'd say, "I wish it hadn't rained."
For the last one, you don't really use that, although it's technically correct in the case: "I wish it wouldn't rain so often." If it's raining currently and you want it to stop, you would say, "I wish it wasn't raining."