LiveCD with usb pendrive persistent home

[James Goldwater]

I'm trying to get Ubuntu LiveCD working with a persistent home directory 
on a USB pendrive.   I can use the pendrive as normal without any problems.

So far, I've run the knx_persistent_home script (found on the web) which 
  puts an empty ext2 filesystem into a loopback-able file called 
.knoppix on the USB pendrive.    I've made a copy of this called 
morphix.img on the pendrive as well.

Passing home=scan fails, as does home=/dev/sda1, and 
home=/dev/sda1/morphix.img

I'm trying desperately to catch the init-script errors but with no luck 
so far (any ideas?), but as far as I could remember, it seemed the mount 
was failing with erroneous options, and it definitely suggesting making 
sure it was an ext2 loopback file, and passing 
home=/dev/sda1/morphix.img as a boot option.

I've confirmed that I can mount the morphix.img as a ext2 filesystem, 
and even mount it as a home-directory, but this is only after everything 
has started up.

Any help will be most appreciated! Thanks,

James.