utf-8 console

[mecho]

Notice also the difference - in knoppix 6.2 the the list of supported locales is in /var/lib/belocs/locales.dep not in /var/lib/locales/supported.d/local as the article says. Knoppix uses belocs-locales package instead of locales that's the reason for this difference

[mecho]

Here is the final polished solution to the problem of displaying characters properly in terminal and all other programs using default locale.
Open and edit /etc/locale.gen
There are many preconfigured locales inside, just find the right one and unmark it. If it does not exist - create it. For example If you want all your menus and programs to be displayed in English, but you need Cyrillic phonetic characters to be properly displayed then type:
en_US.CP1251 CP1251 and save the file. Unmark any other locales which you would need in the future as well.
Next step is to generate the locales using:
sudo dpkg-reconfigure locales
By default knoppix uses belocs-locales, so you might have to to this using:
sudo dpkg-reconfigure belocs-locales-bin
After this is done open /etc/init.d/knoppix-autoconfig and navigate to line 290, just below
*) # American version.
Edit LANG="C" to LANG="en_US.CP1251" or whatever locale you created. I also changed the line CHARSET="iso8859-1" to CHARSET="microsoft-cp1251" - although I am not sure if it's necessary.
Save and reboot. Done
If you want knoppix to boot by default in any of the preconfigured languages which are in knoppix-autoconfig, you will have to edit:
/mnt-system/boot/syslinux/syslinux.cfg - go to the line bellow LABEL knoppix,KERNEL linux and change LANG=en to whatever language you want knoppix to boot by default

Hope this was useful