Hi bpnoel,
I still have the same problem with nearly every Linux Live-CD, but a short time ago someone recommended Ubuntu, as the new version 7.10 is available now.
I tested the CD (which is a combined install and Live-CD) and it worked with no problems.
It's using the 2.6.22-kernel, maybe you can use Ubuntu instead of Knoppix?

Hope that helps!

HAVE PHUN!