I've run into this problen myself. To be safe you should replace the kernel modules in the miniroot and recompile cloop and replace that, but this is not the cause of your problem. I beleve that your problem is caused by the init in the miniroot being uncompatable with your new kernel. In the case of knoppix init is statically linked with ash (the initial shell). So you will need to recompile ash-knoppix against your new kernel and sources(it's on Klaus's site somewhere).

jTal