I have installed the latest Knoppix 3.4 on the HD and there is a whole lot of errors I get when booting using 2.6.x kernel that lead to a kernel panic.
Please see a picture of the screen:
ScreenShot

Is anyone able to give any suggestions?

My setup is as follows:
Athlon XP 2200+
Gigabyte motherboard (VIA chipset, ATA 133, no RAID, no SATA)
384 MB of RAM
SB Live!
Add on PCI card with ATA133 controller (2 more channels) - based on Silicon Image 0680 chipset. No RAID or SATA.

And most importantly my IDE drives:
1. Maxtor ATA HDD connected as master to the Primary Channel of the built in IDE controller (strangely it is identified by most linux distros as HDE no HDA). This is where I've installed my Knoppix (HDE4 partition).

2. DVD by Toshiba connected as master to the secondary channel of the same controller (HDG)

3. TEAC CD RW drive connected as master to the primary channel of the add on PCI card ATA133 controller (HDA)

4. IBM ATA HDD connected to the add on PCI card ATA133 controller as master on the secondary channel (guess what: most distros sets it as HDC )