I get this error when I do not have the support for the contained file system. For example, I need to first load ext3 module otherwise I get this fail. Always the case.

Would be really great to see even kde 3.x packaged.
From what I understand, you will do a loop image. Too bad..

Yes, xfce probably uses a loop back as it's image can be put on vfat and xfce probably needs soft link not supported by vfat.