In the hope that this will help other Knoppix users.
Starting from CD I installed Knoppix to a second IDE drive [hdc2] with 4Go for the root partition and a 400Ko swap prepartitioned with Partition Magic. I have a TEAC SCSI CD RW unit running from a Tekram dc395U SCSI controller which is not supported by the standard 2.4.20-xfs kernel. My goal was thus to patch the kernel.
The first problem encountered was a lack of sources on the CD distribution which necessitated downloading a new kernel., as it proved impossible to reconfigure a kernel without it's sources!
The first hurdle was finding a kernel with a cramfs pre-patch. 'Pristine' kernel-sources do not contain this pre-patch so you need a 'Debain' kernel-source, otherwise the Knoppix 'xfs' patches will not work, and as you have an 'xfs' created file system from the hard disk install all hell breaks loose if the cramfs pre-patch is not present. I had to find my own patch for the Tekram, but using the Google/Linux search engine on the default Mozilla browser page was an excellent starting place. All third party patches should be decompressed and installed in the /usr/src/kernel-patches/all/foo folder - this will allow the make-kpkg command to install them automatically.

It would be a good idea to run 'apt-get --update' from a terminal to get your package list up to date. Get an internet connection FIRST, then you can go and make some coffee.
The K-packge program in the /K menu/System menu will let you choose and download and install the kernel-source you want. You can use the 'find' icon in K-package to look for suitable available kernel-sources.
Go for long walk with dog - kernel-sources run to about 29Mo so if you are still on dial up modem like me you have some time on your hands. About 2.5 hours with a 56KB modem.

Then: you need to edit the /etc/kernel-pkg.conf file. I use KDE window manager and the easiest way I have found is to open a terminal, 'su' then enter your root passwod and run 'Abiword'. This is a very intuitive text editor and will hold no surprises from those migrating from M$ WORD. You will need to add the following lines:
do_initrd=YES
patch_the_kernel=YES
config_target=xconfig (Here the choice is up to you, xconfig is a graphical configuration application with associated 'help' information for each choice, there are also 'config' and 'menuconfig' which accomplish the same task more rudimentarily)
Save the edited file and quit.
Once you have downloaded your new kernel, you need to unpack it into a dedicated folder such as /usr/src/linux-xx.xx.xx that you need to create. Easy method is as follows; Konqueror/find your new kernel/right-click and choose 'extract here'. This saves all the hassle of tar -xvzf stuff in the terminal.
You'll now have either a foo.tar.gz file which you unpack in the same way, or a /usr/src/linux-xx.xx.xx/kernel-source-xx.xx.xx folder.
Go to a terminal and 'su' plus enter your password.
cd /usr/src/linux-xx.xx.xx/kernel-source-xx.xx.xx
make-kpkg clean
make-kpkg --initrd --revision=custom.1.0 kernel_image
This will first of all apply the xfs, and any third party patches to the kernel sources after testing their validity.
Then your configuring program choice as per above will be called. If you are unsure about what you need, choose an existing configuration file from /boot/config-2.4.20-xfs then 'Save & Quit' Otherwise you will need to wade through all the choices and read the help stuff, and try to decide if you really need it or not or would like it as a module.
The very first choice '....third party or incomplete code' should be marked YES or you third party patched stuff will not appear as a choice in the relevant section.
Obviously, if you don't have 'radio', 'adsl', infra-red', 'USB' stuff, then you can mark these choices as NO. You shouls leave the 'file system' and 'net' stuff as is.
The stock 2.4.20-xfs configuration has almost everything chosen as modules.
You can ignore the warnings about 'cramfs & initrd & bootloader' and 'you're going to overwrite your /lib/modules' stuff. Just choose to continue.
Go and paint the garage A good 2 - 3 hours of crunching data. You will find a :::::: .deb file one level up in the linux-xx.xx.xx tree when it's finished.
Getting there. Now run dpkg -i /usr/src/linux-xx.xx.xx/foo.deb
This will install the created .deb package, write the SystemMap, Config, Vmlinuz-xx.xx.xx files in /boot and update the /lib/modules/linux-xx.xx.xx files.

if you do not want to use LILO or LOADLIN as I did there IS another solution, despite what many people will tell you.
Format a floppy.
Copy /boot/vmlinuz-xx.xx.xx ( your new kernel ) to /floppy ( you may need to mount the /floppy first )
In a terminal as 'root' run syslinux /dev/fd0 ( that's a zero, not an O )
Rename vmlinuz-xx.xx.xx to vmlinuz on the floppy.
Copy ldlinux.sys and linboot.img from your original floppy to your new floppy. It's best to copy them first to a /tmp folder, unmount the /floppy drive, change floppies, remount the drive and copy from /tmp to /floppy. It's messy I know, but my box gets confused copting from floppy to floppy.
Logout, reboot (with NEW floppy) and pray.
This method will leave the kernel almost entirely as it was apart from the things you've changed in the configuration process.
Maybe keep some rough notes of your alterations in case you get any errors, or should you decide on some further hacking.
You can always reboot with your original floppy and return to the original kernel for corrections.
I hope this is understandable. Reading it back, it certainly looks more lucid than the countless 'info', 'man', '& 'doc' pages I've waded through getting this far.
Other info on #debian IRC, but be patient, courteous, don't paste in their window, don't ask if you can ask a question. They are essentially knowlegeable but busy people, will not tolerate dumb questions kindly, and are not particularly happy about being invaded by hordes of Knoppix users ( low profile needed, do not leave your 'nick' as 'knoppix' which is usually the default option), but if they can help they will.

OK

Go for it.