My question was about flash disk install done by the Knoppix script "flash-knoppix" and overlay file. It seems for me, the script is unable to format the whole device with FAT32. Either I get the message "Flashdisk is not partitioned properly. The first partiton must be DOS/FAT32." or the message "mkdosfs: /dev/sda1 contains a mounted file system".

I've tested it with three devices which works without problems under other circumstances. And also partitioning with gparted first doesn't help.

My USB installation done by "flash-knoppix" and with overlay partition works well and I can use all the cheatcodes I need.

I'm using right now version 7.4 on a 16 Gb USB pendrive which I made with pendrivelinux from KNOPPIX_V7.4.0DVD-2014-08-01-EN.iso a few hours ago. It works as long as I don't try to use any cheatcode on boot.
What happens or what error message do you get using a cheatcode? And did you ever try to use the cheatcode "knoppix testcd"?