Same problem and error message here. I first tried the easier Debian way of installing NVidia drivers right from the repos, both using the default repo (which brings in the Lenny/Squeeze 173.09) and the -t unstable switch to bring in Sid's 190.42. Just got dependency issues preventing the install. Aptitude wants to install the non-Knoppix customized Debian kernel's and so that dog won't hunt of course. I checked for the usual dependencies (build-essential, linux-headers, etc) and they, like in the previous versions of Knoppix DVD, are already installed. The nvidia-kernel-common package installs fine but as soon as nvidia-kernel-source installation is attempted I get the dependency on Debian kernel's issue. So module-assistant (which does install fine) will not be able to install or use it either. When trying the 173.09 I attempted to install the nvidia-kernel-686 but get the same dependency issues.

The readme's instructions regarding init 2, inti 5 do not work, only ctrl-alt-F1 brings up a console and running the init command from there leads to the same blinking cursor that running it from KDE's Konsole brings up. There's no KDM at /etc/init.d/kdm to stop for the downloaded driver either. That would get rid of the need to use init 2 to clear the hurdle of a display manager running for the downloaded driver but apparently Knoppix calls KDM something else.

The nv driver does work just fine for the normal 2D activities but getting the nvidia driver installed opens up worlds of stuff. And the other glitch of the console switch not working disables the ability to edit, get modules loaded, and restart X in the same bootup.

No idea if these are bugs or intentional, but at least the console restart X stuff looks like it was intended to work like always based upon it being mentioned in the cheatcode readme on the DVD.