Okay, here's how to do a simple test.
1) Boot Knoppix
2) Knoppix->Services->Start NX Server
3) Start a shell session
4) su
5) nxserver --adduser knoppix
6) nxserver --passwd knoppix
7) change password to "test" or something.
Close shell session
9) Log in from NX client on another machine. Username "knoppix", password "test"
10) Enjoy.