I suspect that the kernel is also for the older knoppix. (knoppix.381?)

Here is a more straightforward approach. (you can do this in Windows)
1) Make a new directory under C:\boot named knoppix.501
2) Place just 2 files, minirt_usb6.gz and the linux file from the cd or cd image... (stored at /boot/isolinux/linux) in the knoppix .501 directory.
3) Move the knoppix 5.0.1 iso image file to C:\boot\knoppix.501 also.
4) Edit the c:\menu.lst file and add this:

title Knoppix 5.0.1 from NTFS hda1 ISO scan ramdisk=32MB
kernel (hd0,0)/boot/knoppix.501/linux ramdisk_size=100000 init=/etc/init lang=us apm=power-off vga=791 nomce quiet bootfrom=/dev/hda1/boot/knoppix.501/*.iso config=scan home=scan ramdisk=32768 noprompt
initrd (hd0,0)/boot/knoppix.501/minirt_usb6.gz
boot

caveat:
You will not be able to create a persistent home image file on the c:\ drive, so I would suggest having a thumb drive ready to create one on. (The c: drive is going to be mounted as read only!)