OK ... That sort of works.

As for the devices on desktop all going to /cdrom issue:
By messing and fiddling about with the control center, after removing all the device icons from desktop, and adding the MOUNTED devices only, the devices on your desktop will link to their proper drives.
For some reason when knoppix loads it binds the /cdrom to both local hard drives (/dev/sda2 and 5) in my case, and I couldn't find a way to remove that.
They show on the mount details as:
/dev/sda2 on /cdrom type ntfs ... (ro, something.... )

then later down the /cdrom is bound to the usb partition with the cdrom files:
/media/sdb2 on /cdrom (ro)...

I found that if you mount the hard drives from the root shell, with rw permissions and all, then just use konqueror to go to storage media they open up just fine. (and their desktop icons too, but you would still have the original device/partition icons that lead to /cdrom unless you removed them).

I guess the easy way is to save your persistent home with all the desktop icons off, and write a bootup script to mount all the hard drives so they would show as they should on your desktop.

I'll keep on fiddling with this.