I know that in Fedora Core 3 (it should work in FC2 as well), if in GRUB you use the "init 3" cheatcode (without the quotes) it will boot you into console. To use it just have FC2 selected and type "init 3". After that you can try to delete that file you were talking about, though I dont think thats the problem. I forget what command resets X config, but I am sure somebody here knows it. As for knoppix, if you have another PC with internet access(which I assume you do because your posting this), then download the iso from the knoppix website (just do a google search). Knoppix is a live CD linux distro, which means you just boot off the CD without your harddrive being used.
Hope that helps,