"I am now hearing for the first time a knocking sound coming from the rear of the vehicle when the brake pedal is held down. "
Loose caliper? Ie. missing bolt?

"Btw, do you know what is the best or sufficient psi for pressure bleeding?"
I'd say 10-15 psi is plenty. It provides a good strong stream at the bleeder. And you aren't likely to have air enter while closing the bleeder. The reservoir is the weakest point and pushing higher than 15 is risking it popping out from the MC, if it doesn't burst first.

Sometime back a bber was having problems with a spongey pedal even though he had bled many times. He finally came to the conclusion that it was the metal shims which were slightly bent and acting as springs.

However, a while later he posted that some rubber dust boots that surround the pistons had extended over the pistons and were being pinched giving that spongey feeling.

So it could be either rather than air that's causing the spongey pedal.
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1980 245 Canadian B21A with SU carb and M46 trans in Brampton, Ont.