So I started working to fix this myself.

I downloiaded the libdvdcss .dev file and used "alien -g libdvdcss.deb" to extract the library then coppied it into my /home/knoppix directory

I set up the LD_LIBRARY_PATH
export LD_LIBRARY_PATH=/home/knoppix/:$LD_LIBRARY_PATH

And xine seems to not complauin about dvd encryption. It even goes through the VOB tracks and looks for keys, but I cannot get it to play.

I did try mounting the dvd drive as /mnt/dvd and soft linking to /dev/dvd

If I do not set the LD_LIBRARY_PATH I get the copy protection screen, but nothing more.

Thoughts?