I found this by 'trial & error' ; I have not found it posted before so this may help somebody else to save their time .

If running the 3.7 Live CD with kernel 2.6.9, and then doing sudo knoppix-installer, the installation seems to proceed OK, but then the installed system is not bootable.
However, if you boot-up the Live CD with the (default) 2.4.27 kernel, then all is well.
... and when booting the Knoppix installed on the hard drive (I install for the 'Debian' mode), then either kernel can be successfully chosen.