Here are the steps I go through when using Knoppix. Figured I would put them all here since it may be of help for others. If you are able to boot up your computer using the CD drive as the boot drive, with the knoppix cd in, then the next steps will work no problem. Windows XP is not used in any step in this process only Knoppix as your operating system.
1. Boot up computer using Knoppix as the boot volume. Cd drive is the startup volume. May need to adjust some settings to make your computer to do so.
2. At splash screen just hit "enter" key and Knoppix will startup.
3. Connect to the internet either through a network or using the normal ways. If one is using cable for internet access then you'll already be connected. For pppoe you'll have to connect using your username and password, can't recall at this moment where this is located but it isn't hard to find in knoppix where this info is done for connecting to the internet.
4. Go to
http://www.serverelements.com and download, if you don't already have it locally saved. Save the NASLite file in your Home directory. If you encounter any problems in trying to get the floppy made it is just an issue of having the file in the right location of your Home directory. Had some fun in this step myself a couple of times.
5. Look for the icon on the taskbar "Terminal Program" and launch it.
6. In the terminal program you might need to type in sudo su to get root access. To keep root access active keep the terminal window open that you have done this step in. From here all one has to do is type in the terminal program window the command lines located on the serverelements web page. One just has to substitute the file name NASLite.img.gz with the file name of the one you are wanting to make a floppy of. Gunzip pretty much unzips the file fdformat reformates the floppy for the larger capacity and the last one puts the NASLite data onto the floppy.
gunzip NASLite.img.gz
fdformat /dev/fd0u1722
dd if=NASLite.img of=/dev/fd0u1722
7. The NASLite floppy will now have been made using Knoppix as your operating system.
Again, just put these steps here since it may be of benefit for others who are wanting to make a floppy. And may help you also. Could be wrong in what your problem is but it sounded like the floppy just was't properly done up.
Good luck with it.