Greetings again, Howie

With Knoppix 7.0.5 you have TWO choices for persistence files.

One choice is to create one within the same partition as the OS
using Fat32. This persistence file is not limited itself to 4 Gb, but files
placed on it must be less than 4 Gb. And the time it takes to
format a Fat32 persistence file is proportional to its size.
Formatting one larger than 4 Gb may make you think something's
gone haywire before it completes.

A new choice has been added which allows persistence to be
achieved with a separate reiserfs partition. This approach has
no similar 4 Gb file size limitation, and doesn't take any
time at all formatting.

There are a lot of good things about Knoppix and its LiveUSB
is my favorite choice of Linux.