@CPC_FanIf it says unknown command the M4 board is not initialized.
To rule out a couple of things for starters.
Use the MX4 cable directly plugged into the M4, set the jumper to EXT. Don't connect any external power supply.
Since yours is quite long time ago, I am not sure which firmware is on it, so I suggest you download latest firmware, here:
http://www.spinpoint.org/cpc/M4FIRM_v107.zipUnpack the files to the root of the microSD card from your PC, insert it to M4 and power up the CPC6128.
You should see the RED led come on (below the blue one) for some seconds, then blue led on WiFi module comes on and some seconds later, it goes off a long with the RED led.
CPC should reset and you should see the message M4 Board V2 displayed.
If you do not see this message, sending netset command etc will not work.
Let me know how this goes, then we can take it from there.
For DNS servers you can just use google dns, which is "dns1=8.8.8.8, dns2=8.8.4.4"
And most likely the M4 board is in conflict with XMEM, this can be solved either by disabling rom board on XMEM or changing the ROM range on M4 once you get it setup.