Remember that the problem the diagnostics isolate is only the symptom, not necessarily the root cause. Check your ECU connections, and grounding as well. Also check the torque you are using to snug down the knock sensor, as this is critical to its operation.

I had a problem on my '83 where I thought the knock sensor was bad. Turned out the ECU was not providing the proper supply voltage to the sensor, so I needed a new ECU.
--
Speed Racer, '83 240 R, '74 164 E, '93 940 OL1 (Manchester, CT)

If you want to physically trace the two-wire path from Knock Sensor to Ignition Control Unit (ICU), here goes:

There is a Black and a Green wire. From the Knock Sensor, they go to an 8-pin connector back in the left rear corner of the engine compartment (maybe tie-wrapped up under the strut tower support). The Black wire goes thru Conn. Pin 7, the Green thru Pin 6.

From there they go to the ICU (inside, behind panel next to driver's left leg). The Black wire comes in to ICU Pin 12, the Green to Pin 13.

Try opening each connection and using the recommended cleaning procedures. Sometimes just disconnecting the reconnecting the junctions cures an intermittent failure.
--
Bruce Young,
'93 940-NA (current)
'80 GLE V8 (Now gone)
'83 Turbo 245
'73 142 (98K)
'71 144 (track modified--and still here)
New 144 from '67 to '78
Used '62 122 from '63 to '67

More likely it is a connection problem to the ECU. Make sure you have cleaned, deoxidized, protected with silicone dielectric paste, and tested the connections at the sensor and to the ECU.

Here is a recent post that may help. Talks about how sensitive a knock sensor is to too much torque, RF interference, other ideas.

My other suggestion is to find a new mechanic. Disabling the light is not a solution.