I'm not sure if it matters but I thought I read that the ext3 filesystem was used or should be used in remastering. You said the file was larger when you did it. Does that mean it didn't all fit on the CD? My 700MB CDROMs are pretty much 100% full with the standard Knoppix image.

Another thing about remastering is that Klaus uses a script to organize/order the files put in the KNOPPIX/KNOPPIX image for quicker boot time loading. But that shouldn't prevent your booting.