You do realize that I'm just Googling for info, trying stuff out, and reporting back -- i.e. I'm making this all up I go along?

Try doing exactly what the error message says -- make a /root/.mtoolsrc file that contains the line "mtools_skip_check=1" and see if that works. If it doesn't, try pulling everything off your thumbdrive that you want to save, reformat it in Knoppix using vfat, and try syslinux again. (I don't think it matters if you run syslinux before or after you copy files onto the drive.)

I think that many of the parameters that are in the default "isolinux.cfg" file (like the ramdisk size) are also set by the startup script in the miniroot image.

I think that the bare minimum you have to copy to the thumbdrive are the kernel and miniroot image pair you plan to use, boot.cat, boot.msg, logo.16, and isolinux.cfg.

You can keep konqueror from popping up by deleting ~/.kde/Autostart/showindex.desktop from your persistent home. I think the way to keep kmix and the Knoppix icon from coming back is to start up the KDE Control Center, go to KDE Components > Session Manager, and enable "Restore manually saved session". You'll find a new entry near the bottom of the K Menu called "Save Session". Click on it when your desktop's set the way you want.