Since the sound is intermittent and is always associated with moving the steering wheel, I think it is extremely unlikely the sound you are hearing involves the engine. The key to that is that you can extend the sound by holding the steering wheel at the point it starts when the steering wheel has been in motion. Further evidence would be if the knock varies in sound or does not have a consistent cadence. Does the idle drop much when the steering wheel is turned? Are there other circumstances, like the engine is cold or only after you have driven several miles that are particular to when you hear the knock?

I would troubleshoot the power steering components. I would have someone do what you do, holding the brakes with the emergency brake engaged and the back wheels chocked so you can pin down the location of the sound by listening near the power steering pump and the steering rack assembly.

Sometimes bad sway bar links will make noise when they are under pressure from moving the steering wheel, usually closer to the lock point, and the sound can continue for a second or two when you stop turning the steering wheel. However, I would not describe that as a knock but more like something is binding/releasing/binding/releasing. Nor would I expect it to be at all at a consistent rate or matching engine RPM, which an engine knock would do. Suspension parts could be the problem but I would start with troubleshooting the power steering components.

There are many threads about smoke in traffic involving a 4.8. I would search the forum. Sometimes it is just a wee bit and sometimes it is fogging for mosquitos. From those I have read, it is hard to pin down the cause. Sometimes it is at least temporary manageable by going to a different or heaver weight range oil. Valve guide seals are the usual expected culprit but there are other potential less involved cures.

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X5 4.6 2002 Black Sap, Black interior. 2013 X5M Melbourne Red, Bamboo interior
Dallas