as far as linux compatibility knoppix is linux its a variation of linux just like there are variations of windows 98 98se me 2000 xp 2003 etc....
after you boot the knoppix cd

select root shell under knoppix entry in the menu

type knoppix-installer
under the menu it the option to partition your drive

use most 95% for main drive 5% for a swap drive (linux equivalent to the pagefile.sys file in windows) format the main drive as ext3 and the swap as type swap

then select installation options

then actually start installing

it will tell you when its done

reboot

leave the cd out this time and you have a linux system