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It's usually an intermittant fault code and there's no real good method to check the knock sensor itself (rarely the cause anyways). That code/problem is not unusual for '94 850 turbos and there's a SB on "upgrading" the two knock sensors for a kit where they're both hardwired together as it's sometimes (thought to be) a connection problem BUT not always.
I experienced and read here too that after the knock sensors are replaced (usually the first step and cheapest place to begin), the code on some cars still re-appears. It then is finally repaired by replacing the ECU (internal problem) which isn't cheap.
If I were you, I'd start by first cleaning the original knock sensor connection (remove it from the sensor, spray contact cleaner on it, connect/re-connect it several times, then apply di-electric grease into the plug). See if the code then re-appears (might take weeks)
There's 3 possible causes for that code and no great method IMHO to properly diagnose it right the first time as it's intermittant and not duplicateble:
1) bad knock sensor or bad connection at knock sensor
2) wiring between knock sensors and ECU
3) ECU
I've never seen where it was #2 (not yet).
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