We've seen a lot of problems with USB booting on some systems; even though the BIOS seems to claim it is capable of booting from USB, it may not be. You didn't mention your particular hardware, and I likely wold not know if it had a USB booting problem or not, but it's always better to post too much information than too little.
In my case I was trying to get a flash drive with DSL installed by their automatic script to boot on an HPze4210 notebook. The BIOS was set to boot from USB, but it never would. The same flash drive also failed to boot on an IBM thinkbook notebook that claimed to be able to boot from USB. I later got a new notebook, an HP DV6000, and the very same flash drive booted just fine on that.
My first suggestion would be to try both DSL and Puppy Linux, both of which have very nice tools to make a bootable USB drive and some nice features for additional package support that Knoppix lacks (and at least Puppy has much better wifi drivers than Knoppix). If you can't get a Puppy Linux or DSL flash drive to boot on your system, it is a pretty strong indication that you are going to have problems with Knoppix also. If they do boot then it's time to work on Knoppix (if you want it rather than the system that works).
The other thing to mention is that there has been some discussion that the reason for booting problems may be that some older BIOSes were made to boot some IOMEGA and other external USB hard drives, but were not designed to boot flash drives. It is said that you might be able to get such a system to boot a flash drive if you change the defined geometry of the flash drive (I think you'll find the discussion of this in the wiki). I have never done this myself, so I can't say that it works, but I thought you might want me to pass it along.