When you use the boot directive home="..." and it doesn't find your persistent partition that you created with the
knoppix util - the problem is with the "/etc/init.d/knoppix-autoconfig": in line 1037 it is looking at each mountable
partition for "ext3|ext3|reiserfs|...". The first "ext3" should be "ext2".

Workaround (for now):
Use mkfs.ext3 to create your "home/persistent" partition then run the knoppix utility that makes your image. Lmk if you have probs.
Cheers,
Joel