I used to have the same problem in my (now sold) 1996 VW Passat, the knock sensor (also made by BOSCH) was replaced 4 times by the dealer and still the same problem. A known issue in the 96 Passat. The engine otherwise was running fine.
Perhaps they designed the knock sensor a bit on the sensitive side, so any little vibration knocking set it off???
Sometimes it is very difficult, if not impossible, to find the root cause.
As long as the engine runs fine, there is no urgency to solve it right away but you have time to play detective work for the next few weeks and months.
Your other option is swap sensor between let's say #3 and #4, so now if the engine code turns into knock sensor #3 code then you know the wiring for #4 is OK, but rather the sensor is defective.
There are 2 strings of 2 sensors under the intake mainifold, so yes a total of 4. The cover, fuel injectors and rails and intake have to come out to get to them. They bolt down in the valley. The drivers side is cylinder 1-4 and the passenger side is 5-8.
Another thought: sp plugs, did you use the 4-prong??? Try OEM NGK.
This kind of detective work requires alot of patience and persistence!!!!!!
Back in the old days, when cars ran on carburator, we never have to worry about this crap...haha!
Last edited by cn90; 09-27-2007 at 08:59 PM.