I had similar problems trying to activate my usb optical wheel mouse. I ended up reloading Knoppix on my hd. In the process, when I loaded the live CD, V3.4, happened to notice that my usb optical wheel mouse worked fine. When I installed to my hd, using knoppix-installer, at one point it asked me if I wanted to install similar like the live CD, I marked yes and rest is history. Everything works fine.

So this begs a question of what is the difference between the Live CD and what is loaded on a standard install?

I'm a newbie so where can you see the install scripts?