From a read of the datasheet on that diode, it's only rated for 205ma as the max continuous current (not truly a 400mW diode, really more like 120-150mW - only achieves 400mw at a 35% duty cycle with some tens of nanoseconds pulse width) - it's also very much designed for low-duty-cycle operation as it's intended for use in a DVD burner.
I'm not hugely surprised it's only lasting a week or so in constant-on - that's probably around its useful lifetime at full power, as for the vast majority of the time it's in a DVD burner the diode will be doing very little, and it will pretty much never see full power.
If you're not particularly attached to 660nm you might have better luck with a higher power (400-700mW) constant-rated diode running at a lower current - one of the Mitsubishi 500mW diodes DTR sells (
https://sites.google.com/site/dtrlpf/home/diodes/mitsubishi-635nm-500mw-diodes ) may work, or the Oclaro HL6388MG 250mW diode (
https://sites.google.com/site/dtrlpf/home/diodes/oclaro-hl6388mg-250mw-638nm-diodes ) if you can't swing $34/diode - these diodes are intended for continuous operation (in projectors and other such high-duty-cycle applications) and so will likely last much longer, especially if not run at full power.
The Oclaro is also $25/piece in quantities of 5 from DTR, and he may have a further price break at 10 units if you PM him (depending on if you actually need that many)
Your logic in picking a 400mW diode to run at half-power for longer lifetimes was totally sound - you just didn't actually choose a 400mW diode