"Burst" is just a term that players use to refer to stacking multiple sources of damage into a very short period of time. It doesn't actually refer to an in-game damage type.

"Direct" does refer to an in-game damage type. If a single source of damage deals all of its damage at once, then it's direct damage. (There are a couple of exceptions, but those are bugs.)

So Merciless Resolve and Concealed are direct damage, but they're also sources of burst damage, since you can combine them with other hard-hitters (or with each other) and a stun to knock someone down from 100-0 very quickly.

No problem! Most people definitely include an ultimate in their burst combos. Incapacitating Strike/Soul Harvest or even Soul Tether is a staple of basic nightblade burst combos. My stamplar's burst combo begins with Dawnbreaker, DKs have a potent burst option in Leap, etc.

If you don't like using Merciless, I would encourage you to find another class to play. I don't mean to be rude! It's just that the entire class is built around that skill. A magblade without Merciless is just a magsorc with less mobility, less overall DPS, and less burst. At any rate, you need to practice so that weaving in light attacks feels natural and is something you do without thinking about it. That's the only real way to bring out a magblade's full potential.