Compressed Boot using 2.6 Kernel

I have been a Knoppix/Linux user for about a year now and have used Knoppix 3.2->3.7. I work for my school and what we have done in the past with both 3.2 and 3.4 is copied the compressed file system to a fat32 partition on hda2 and use GRUB to load the kernel and initrd. I have run in to what seems to be quite a roadblock. We are trying to use this setup on IBM ThinkPad R40's which seem to have buggy bios' (though fully updated) in which the 2.4 kernel cannot correctly identify the harddrive. When booting from the live-cd using the cheatcode "knoppix26" this appears to work perfectly, it boots. But when using the linux26 kernel and minirt26.gz in the /boot/isolinux directory of the cd with GRUB the kernel quickly panics. I have tried including the fromhd cheatcode with and without arguments. I then tried the linux26 and minirt26.gz from the 3.4 livecd which worked to a limited extent (using the same grub.conf). Knoppix booted without most hardware being detected but it did boot, and the harddrive was recognizable. I know I am probably missing something simple, or something that has been discussed already, but after a full 8 hours of googleing and trial-and-error I'm about at wits end. Right now I have Knoppix 3.4 booting right now, but it does not have support for all our hardware (we need to get wireless working). I have checked the md5's of my cd's but the kernel will still occasionally complain about a checksum error reading the initrd.

We would prefer this setup because it is read-only, students need to be able to use it without easily breaking it. We use GRUB because we need to also dual boot to Windows. Am I missing something simple? Any help anyone can give would be greatly appreciated. Thanks!