Yes, Knoppix can be used with a persistent image and this persistent image can also be used with vmware.
I actually use a persistent image in the process of creating my Knoppix virtual machine.
So obviously you can create a vmware virtual machine with a persistent image stored on a vmware virtual hdd.
You don't need to use my zip file, just create an empty virtual machine and install everything
as you would do on a real machine, including formatting the hdd, installing a disk boot loader and
installing the vmware tools before creating the persistent image, so it can be used for the next boot.
By doing so you will be able to store changes and keep your data for the next boots.
The draw back of this approach is in my opinion the large size of the virtual machine.
As an example, it is quite hard to get a persistent image smaller than 100MB if you install the vmware tools...
This is the reason why I decided to use an other customized & optimized mechanism to load
the vmware tools which is not really compatible with the existing persistent image mechanism.
My goal is to provide a ready to use and ultra compact Knoppix vmware virtual machine (<10MB) which can be used
to have a quick access to the native linux tools and/or as a very fast free X server to access an other Linux box.
So as a quick answer, I do not see an easy way to use my zip file to create a persistent image.
Since I used a persistent image to create my setup, I would recommend you to do the same:
Create a virtual machine and install Knoppix as it should be done on a real machine.
You may still want to consider re-using my bootlaoder and/or my boot ram disk in order to boot from
the iso with custom kernel cheatcodes (to enable the loading of persistent image as an example).
After a second thought, I did not try to create a persistent image after having booted from my Knoppix vm.
It may work ... (with some tweaking)