Got it,
its not a perfect solution and I dont know why it works/didnt works.

Ill be glad if anyone will find a better way to make it work and without the errors it gives.

stage 1:
to make your menu and X-windows the way you want I do as follow:

vi /etc/X11/Xsession.d/45xsession

comment out lines 125 - 154

and save the file.
(comment out is putting # at the start of each line).

stage 2:

vi /etc/init.d/knoppix-autoconfig

at line 1181 after the fi in new line i add:
mkdir /home/knoppix
cp -R /etc/skel/.??* /home/knoppix
chown -R knoppix:knoppix /home/knoppix


make steps 2 & 3 and burn the iso.

thanks again for the author for making this HOWTO,
it saved me alot of time and I hope the steps here will help others (even if its not perfect solution.)

thanks.