My computer started up, but where it normally said the "BOOT DISK FAILURE" error I got a whole bunch of nothing. Basically, the line before it "Verying DMI Pool Data..." or something similar to that ran, but then I never got the boot error.
This suggest the MBR is hosed. You can try booting up with a Windows Recovery CD or the Windows Install CD and go into the Recovery Console and do a "fixmbr".

For your info, I followed all your steps with a test system of my own - deleted a XP partition, guessed the partition with gpart, wrote it out, set hda1 active, rebooted, got the big black screen........but then Knoppix did not hang - it could detect the partition. Then I quit Knoppix, used Windows CD to fixmbr, and it could boot Windows again.

Knoppix.....wrong. It does the normal colorful boot screen and then stops right after "Scanning for Harddisk partitions and creating /etc/fstab... Done." Then it hangs.
Searching this forum or Googling about Knoppix hanging while scanning for hardidisks or creating fstab may give you some ideas. Some posts suggest this indicates a hardware error. But there's no need to give up hope yet. Try these boot cheatcodes at the Knoppix boot prompt:

knoppix nodma
knoppix nofstab
or both, i.e. knoppix nodma nofstab