Very strange..............

In my case

1) "knoppix home=scan" always works.
2) no cheat codes at all always works.
3) "knoppix home=/dev/sda5/.......... does not work
4) "knoppix home=/media/sda5/knoopix.img works

Since it is the shortest, I always enter no cheat codes at all and allow Knoppix to scan and load the image. I have been able to load from fat32 and ext3, primary and logical, ide and usb drives.

I can only suggest the following:
1) perhaps the .img file is somehow corrupt. If there's nothing valuable on it, try deleting all knoppix.imgs on your disks, then create a new one. Preferably start with putting it on an ide partition if you have one. Start with one of a smaller size.
2) don't use the encryption option
3) try the /media....cheat above.