Kawdude, I hit some surging with the 2nd notch this weekend after a few long hard runs on the kx. I was able to mostly adjust the richness/leaness with the air screw.. Which helped alot. It was about 70 degrees outside. So, a bit lean I think. Running a 42 with a 160 main really worked out, it felt a little lean down low and in the mid. Adjusting the air screw did help alot, although it did not completely go away, it worked wonders.
I think maybe the air screw may have did the job. The knocking you are hearing is a spark knock and sounds like you may have been a little lean. I would go back to the 2nd notch and give it a shot. Let me know how it works. I think the air screw should have done the trick..
EDIT:I'll go into more detail of my excursion from this past Sunday. We have a semi-local place which is 2000 acres of sand. No dunes..
Which has a packed dirt/sand drag strip, which is 3/5th of a mile also has trails that are about 10ft wide and are miles long. Well, anyway, it was seriously a beautiful day, no humidity and 70 degress and not a cloud in sight. Anyway, perfect day to ride. I came using the 42 pilot, 2nd notch, 160 main, and 2 1/2 turns on the air. Deciding to try a 50/50 mix of pump and C12, just to see if it would work and save some $$$. I started the bike and noticed RIGHT away it was idling funny, mixture of richness and leaness. How do you describe, not a clean REV. It puffed and caughed in a rev. It did not want to cleanly rev through the RPM. Anyway, I would have thought that was rich. Well, as the day progressed, I got to do some 5 mile runs on the trails, mainly 3rd to 4th WOT, preformed fine, still had a revving problem, would not rev through the rpms at a standstill, but would run through the RPM fine in gear.
After about 4 hours of drag racing and racing the trails, I noticed if I hit the throttle it would rev, then surge badly, like keep reving, almost as if the gas was running out.
Anyway, played with the air screw, back to 1.5. Helped ALOT but made it bad in the idle.
That is where I am. :-/ Busted all 3 pipe mounts too.
Serious bummer. Kawdude, if I can get a clean rev without surging in the RPM's at a standstill (Neutral or clutch in) or blubbering, I would be happy.
Overall, the bike performed well, unless I revved it or ran it hard for some time, it did great! I'm going back to streight C12 to see if that helps.