GRUB can boot Knoppix from an iso placed in a logical partition. Just ensure menu.lst entry points to it correctly and points to the correct kernel and image files. However it seems to work only from a ide drive identified as hd*, and not from drives identified as sd*. My knoppix boots from hda6 (which is a logical ide partition). Again remember on the hda6 you need the iso file plus a /boot directory with the kernel and miniroot files.

I tried GRUB to boot the iso from a SATA logical partition identified as sda6. It didn't work. Similarly, I tried it on sdc1, a usb external drive. Didn't work either. These can be made to work, I think, as I have seen some resources on this, but it takes more effort.

Do you have any hd drives or are all you drives sd?

PS. on using the DVD to boot with the bootfrom cheatcode: I tried exactly what you did, with bootfrom=/dev/sda6/knoppix.iso; it worked. So I can't think why it didn't work in your case. You can tell it works if you find that sda6 (or 4 in your case) has been mounted as cdrom2.loop, and you can take out your DVD.