The knock sensor is in a blind hole. There is no water behind it. I can't help on the gas motor, but our 6.5 diesels have a lot of leaks when they get really cold. Hoses and fittings like you said. They leak alot around the upper water crossover, and it runs down the middle of the engine and leaks out the back by the starter. Try looking higher up on the engine. Didn't that engine use the quick connect fittings on the heater hoses? Joe