I took your advice and was patient allowing the the "install knoppix to flash drive" available in the LXDE menu of knoppix 6.4.3 CD version to run.

I managed to install correctly and save persistent preferences (a.k.a. "Saving State in Knoppix), but I think I should list some things that are very important:


1. It's probably better to completely wipe usb stick of all data with something other than simply the formatting feature in: The "install knoppix to flash drive" feature (available in the LXDE menu of knoppix 6.4.3 CD) which in my opinion is insufficient.

It seems this process is not accurately showing a completion dialogue box (a meter showing whether or not it's complete) and it tends to run in the background. I let the installation run and didn't touch my computer at least an hour after it started.