My hotel recommendation for Kraków would be the one I stayed in in January 2020, Corner Hotel.
Really nice modern place, with decent beds, excellent showers (honestly you'd be amazed how much variety you get around the world with showers), induction hob cooker, mini kitchen, fridge (certainly in the apartment, not now 100% on the individual rooms), excellent WiFi and the breakfast buffet was worth paying for

Oh and there's a kettle in the room, something I rarely see in a European hotel
Quite close to Kraków's historic city centre too, with buses and trams a couple of minutes' walk away. Couple of convenience stores within a few minutes too, and the railway station is not that far either. I loved my stay, both in the apartment and in one of the regular rooms, and I honestly would not hesitate to book it again, as well as of course recommending it to everyone
Depending what you want to do in Kraków and the surrounding area, you might only need one night there. It's not a huge city, so the best bits are all easily walkable. I didn't want to do the salt mines, and Auschwitz was so far off my list of things to do I'd rather re-hire an old boss and work with them than go to that place...
As for an InterRail trip, I have considered one myself. I had hoped, in 2020, that I would get to do it in 2021 but that looks unlikely
I'm a bit late to the party with this thread, but I would recommend two days in Budapest. It's another easily walkable city, although I would say it's a bit more spread out than Kraków so it takes longer to walk between highlights. If pushed for time, a long day of exploring with the aid of trams would be doable but less fun.
I completely fail to recall, without digging out my trip report, which station was the most impressive now. I want to say Nyugati, but that name suggests the station I couldn't get out of fast enough. Keleti is a name with better memories, although out of the 3 main terminus stations I cannot immediately recall which was which. I do remember some of the trains have/had a particular charm to them, and I did wonder what they were like to travel on.
Also, when I suggest Budapest by foot takes some doing I am not kidding. I love exploring a city by foot whenever possible, and in the two full days I was there I did something like 41-42 miles. They were long days mind, and it is not necessary to do that much walking. A few miles on the trip were credited to hunting down verified venues on Untappd at the time (this was autumn 2019, way before I went teetotal in January 2020) in all fairness!
There's so many wonderful parts of Europe to explore by rail, I've got my eye on Slovenia for example. I was reminded of it when watching one of Non Stop Euro Trip's videos yesterday on YouTube, certainly a country not talked about as much as it deserves to be!