This means that it's probably hard to fit everything in one 4GB cloop image, but we may use as many such as we like, and everything will still fit on a 8GB pendrive.
I think that Knoppix 6.4.4 supports up to 10 cloop images (KNOPPIX or KNOPPIX0 ... KNOPPIX9 in the "$knoppix_dir"). But how do you decide which files are to be put in a certain cloop image? Does it matter in which order they are loaded by the init script?

The only major problem has been with postgresql, can't get it to install.
If you could explain more details someone might be able to help you a bit further.