It's look like you're trying to boot your iso from a file_system that isn't either a 'vfat' or 'ext2'.
According to this site's wiki it is a 2.4 kernel bug:
CAUTION: The 2.4 kernel that is in the KNOPPIX 3.4 CD does not support the ext3 filesystem so make sure that the ISO is stored in an ext2 filesystem.
But doesn't seem to me so correct since I'm unable to mount the iso even with a 2.6 kernel on a 'ext3' partition.