Thanks for the help everyone.
In the end, one nice email from Bram explained what I was doing wrong. The 5 radio buttons need to be darkened, not lightened, to be depressed and selected. D'oh. I thought I had tried this earlier but nope. This did it. Would be nice if the dialogue explained this more clearly.
Floppy succesfully saved mozilla mail prefs, desktop background, swap file configuration on mounted drive, and even email messages. Nice! Also managed to save a txt file on desktop, but not the html file for some reason.
Contrary to what someone said earlier in thread, I do not need to use two boot floppies, just the one saved config floppy, and 'knoppix floppyconfig' at boot.