Sounds like you burnt the CD right (as long as you confirmed the md5 checksum) or you would not have reached the point you did. Try booting and typing knoppix nodma as soon as you get the boot prompt (or type f2 at the boot prompt to stop knoppix from comtinuing on at this point). Unfortunatel, you might need a different "cheat code", but I know of no good way to determine exactly what code or codes each system needs. Still, nodma may be all you need here.

Other thoughts: a bad download could cause this (thus the md5 sum, don't just download again, trust me on this). Also, some people have seen booting problems when the disc is burnt at high speed that go away when the CD is burnt at 4x.