Cannot start X under any users other than root

I installed knoppix 3.3 using the knx-hdinstall command. This worked flawlessly and have been running the kne3 desktop with no problems as root. However, when I login as a different user, from the X login screen, it just comes back to the X login screen. I can login to a user in terminal mode no problem, but, when I run X I get two errors:
1) No space left in the user's home directory.
2) Don't have permission to run the X server.

I have tried deleteing and adding new users but nothing works. I am at the point where maybe I should just re-install knoppix?
Anyone have any ideas.
Thanks

To allow users other than root start x,add "Console" to /etc/X11/XServer.
This means users logged in at the console may start x.

Will this allow me to change users by logging in and out under kde?