Well there's your problem then
It seems that with your boot parameters sda1 gets mounted to /mnt/sda1, so you could just try saving your files to /mnt/sda1 instead of your home directory. Not sure if this works, but try it.
OR you could bootup your knoppix first without all the myconfig=/mnt/sda1 home=sda1 stuff. Then after it's booted, mount the usbdrive with normal mount command: mount -t vfat /dev/sda1 /mnt/sda1 -o uid=[yourusername]. It won't be your home directory then (instead you can access it from /mnt/sda1), but at least the files will be readable in other systems too. Not sure what will happen to your changes to system settings then...
OR you could just try leaving the last home=sda1 part away from your boot parameters and use /mnt/sda1 to save your files (I would think it will get mounted, but if not, use the above mount command).
Knoppix seems to use this strange .img file because of your boot parameters. Don't ask me why, because to me it seems plain stupid... It could just as well just save the files directly to the filesystem. I guess there is a reason for this, but you have to ask it from someone who knows knoppix better than I do.
Hope you get it working, good luck