On the Debian usergroup I received a solution to do the following
apt-get install mplayer
apt-get install mplayerplug-in
After that, video was streaming perfectly.

The only thing I now still need to fix is to run at 1920x1200.
Debian in single user mode works perfectly at this resolution but on Knoppix installed to hard drive it remains stuck at 1024x768.

Is there any way I can copy over XFree86 or Xrandr files from Debian to Knoppix to get it to work?

I mean if the adapter is recognized and works at full resolution on Debian I cannot see why it cannot work similarly on Knoppix?

Knoppix is really great, all I need is to get out of 1024x768 and to use 1920x1200.