I was able to generate a 512 mb sized Knoppix version. However, when I start it, It gives me an error that IPC couldnt be started and therefore hangs and then just never boots.
Have I un-installed something necessary. I installed Hindi locales and a true type hindi font to get it up and running. It does ask me in the start as to what language do I want from my system .
Aprreciate your help.

[Status : Trying Underscore's How -To again. Its 4:20 in the morning here]