I said I would be back here and report what the Volvo mechanic found with this pesky knock sensor problem. Turns out that it was a bad wiring harness to the knock sensor. But what caused the mechanic to chase his tall around the garage was when he replaced the harness, he wired it wrong. So the knock sensor light still came on. He ended up talking to someone at Volvo HQ and and they told him he had a bad wiring harness. When he told them he had already replaced it, they told him he must have it wired wrong. Yep! That was it. I now have a car wihout the check engine light on.

Thanks for all of the tips given here. This is a great board...