Maybe you made too many updates at a time or some essential packages were removed automatically.
The screenshot shows error messages of the Xserver.
The framebuffer device was not found. My first idea is that you could boot with the additional cheat code 'nofb'.
(EE) open /dev/fb0: No such device
KK should publish the next Knoppix 7 public version within the next few weeks, but I think that you cannot be sure that Knoppix 7 will be working 'out of the box'. On the other hand you know now how to get Knoppix 6.7 running on your system.
I came to the conclusion that it is for me to much effort to go through the whole configuration (WiFi, Bluetooth, ...) again and I would like to wait for the Knoppix Rev. 7 and do it then.
If you remove the persistent image file all your personal settings and downloaded files are lost. If you still need one or the other then you should copy it to a place outside the persistent image file. In this case I would boot into runlevel 2 and create a new directory /mnt-system/myfiles
Copying files is easy if you can use the Midnight Commander. The command will start the program. The article 'An Introduction to the Midnight Commander' explains the basic usage of that program.
After you have copied your personal files you can delete the persistent image file. The main thing is that this file may not be in use. I would boot into runlevel 2 with the additional cheat code 'noimage'. In the console you can issue
This will create an empty file system inside your persistent image file. lets you reboot your system.
mke2fs -F -m 0 /mnt-system/KNOPPIX/knoppix-data.img