I have used the same procedure for getting the newest Debian 8.3.0 live installed with persistence. It took some time getting the details right, as the persistence setup has changed from Wheezy to Jessie.
Now, Debian live has been knoppified quite a bit, so I can specify bootfrom (fromhd), live-media-path (knoppix_dir) and persistence-path (which I don't think has a parallel in Knoppix).
I place the compressed image and the persistence volume in deb830-directories on two different volumes, on the current machine /dev/sda8 and /dev/sda9. (Grub is installed on /dev/sda6.)
As the volume with the compressed image isn't mounted ro any longer, the same volume might be used - I think they might as well be kept separate.
The persistent image is now called persistence, and it must contain a file persistence.conf to be union mounted with the compressed (squashfs) image.
Setting up a persistent image can be done this way (among others)

Code:
mkdir deb830 && cd deb830
dd if=/dev/zero of=persistence bs=1M count=3800  # Create the image file
sudo mkfs.ext4 -L persistence persistence             # Setup a file system on it, label 'persistence' (may not be necessary, but the principle is that such volumes should be labeled
mkdir /tmp/persistence                                         # Temporary mount point for loop image
mount -o loop persistence /mnt/persistence            # Loop-mount the image  
cd /mnt/persistence
sudo chmod a+w .
echo '/ union' > persistence.conf                            # Create a persistence.conf file
cat persistence.conf                                             # Check it
sync
cd -
sudo umount /tmp/persistence                              # Now the image should be ready for use
The Debian live kernel is called vmlinuz (linux/linux64) and the initrd (minirt.gz) is initrd.img. Those files are copied to a deb830 directory under boot.
My legacy GRUB stanza in boot/grub/menu.lst for booting then becomes

Code:
title Debian 8.3.0 64 bits live sda8+9 1
root(hd0,8) 
kernel  (hd0,5)/boot/deb830/vmlinuz boot=live config quiet splash  initrd=(hd0,5)/boot/deb830/initrd.img persistence bootfrom=/dev/sda8 live-media-path=deb830 persistence-path=deb830  keyboard-layouts=no
initrd (hd0,5)/boot/deb830/initrd.img
Then I can use kvm for the rest of testing and setup:
Code:
sudo kvm -dev/sda -m 1024 &
Choosing Debian 8.3.0 from the boot menu will give me a functional Debian live with persistence running in a window. In particular when there is a lot of testing and troubleshooting to do, this can be very helpful. There is also a "sandbox" element to this: The risk for doing damage during the development and testing is minimized. Creating several deb830_X directories each with a persistent image, and creating boot stanzas for them allows working with several versions in parallel - which may be very time-saving, for example when some installation projects end up being rather futile.