The last Kanotix release (based on Debian Sid), KANOTIX-2006-01-RC4 , came out in October, 2006. Shortly thereafter, a Kanotix co-developer (and many of Kanotix's other developers) left the project  and founded their own , mainly due to a disagreement over whether Kanotix should be based on Sid (Debian's unstable branch) or something less volatile, like Etch (Debian's current stable branch) or Ubuntu.
Kanotix's founder, Jörg Schirottke (aka Kano), now has a new, Etch-based version of Kanotix in development, code-named "Thorhammer." It's not yet publicly available, but if you catch Kano in the #kanotix IRC channel on freenode.net and ask, he'll give you a download link. (Note: Only Kano himeslf can give you the download link. Also, there's a link to a Web-based IRC interface to #kanotix on Kanotix's main page  for your convenience.)
Most of the forum discussion  about Thorhammer's in German (not surprising), so it's a bit difficult for us English-only speakers to keep up with what's going on. When the final version's released, discussion in the English forums will undoubtedly pick up.
Thorhammer's based on Debian Etch, with around 40 backports  and a patched Ubuntu kernel (v2.6.22-10-kanotix). Packages include:
- Xorg v7.1.1 and Beryl v0.2.0
- Video Disk Recorder  v1.5.2
- KDE v3.5.5a; OpenOffice.org v2.0.4; Iceweasel (aka Firefox) v220.127.116.11; Icedove (aka Thunderbird) v18.104.22.168
- GParted v0.3.3 (with the ability to resize NTFS partitions); ntfs-3g (for mounting NTFS partitions in read/write mode)
...and many more. Of course, you can install your own from the regular Debian repositories.
Thorhammer runs (and installs) from a live CD, which has the same excellent hardware detection that Kanotix has been known for. (If, when the live CD starts X, the screen blanks — which is probably due to the time being set and power management thinking it needs to kick in — just wiggle the mouse to get it back.) It uses Cathbard's nice artwork .
It includes a slew of custom scripts (I call them "convenience scripts") that make, for example, installing the current NVIDIA driver as simple as running "install-nvidia-debian.sh" as root. (Afterwards, xorg.conf is properly configured for Beryl, and Beryl's ready to run.) It adds some custom applets to the KDE Control Center, in order to allow you to more easily administer your computer. It also comes with a comprehensive user manual (which, as of this writing, only seems to be missing a few screenshots of the installer).
(One difference between Kanotix and "stock" Debian is that Debian runs X in runlevel 2. Kanotix uses runlevel 3 for console mode (with networking but without X), and runlevel 5 for X. With Kanotix, you're encouraged to use runlevel 3 when installing packages (and, of course, video drivers).)
Kanotix comes with ndiswrapper , and a custom script to configure it, but you will need to find the Windows drivers (*.sys and *.inf) for your particular wireless chipset yourself. They're not included with Kanotix.
Installation on an external (USB) HDD went smoothly. The installer's named "AcritoxInstaller " (after its author), and is available in the "Kanotix" menu (in the K menu). The one glitch I found with it was that it stalled out when installing GRUB to the external drive's MBR when run straight from the Kanotix menu. It worked fine when I ran it from a console as root with X privileges: starting up Konsole; typing "sux " to log in as root with X privileges; and issuing the "acritoxinstaller" command.
Post-installation, the only glitch I encountered was that the installer set the keyboard in Xorg's configuration file to German, which made it a bit hard to log in. Changing the line
Option "XkbLayout" "de"
Option "XkbLayout" "us"
in the keyboard's "InputDevice" section fixed the problem.
Otherwise, Thorhammer works well, and seems quite stable.
Although I'll probably stick with my existing Debian testing installation for now, I'm thrilled to see Kano and crew back in operation. From the looks of things, it shouldn't be too long before the final version's out.
Edit: Iceweasel version corrected to 22.214.171.124