The knock sensor will work anywhere on the engine block, or the cylinder heads you choose to put it. Sound waves travel much faster through cast iron than they do through air, and the speed of sound in air is over 600 MPH. A few inches up, down, or sideways won't make a measureable difference in the operation of the sensor. The suggestion about the elbow is a good one. Just use a "street ell" with a male thread going into the block, and screw the sensor into the female thread. You can turn the ell to get the best clearance to the header. Of course, the simplest method would be to trash the headers and run the original exhaust manifolds. Unless you're planning to run above 3,000 RPM routinely, the headers are just for looks anyway.
Jerry
