The issue is you need to monitor a certain frequency range for knock. Everything else is just standard operating noise. You will also need to know what phase of the crank rotation the knock sensor needs to be looking (it ignores the times monitored cylinders are not under combustion.)
Monitoring knock is incredibly complicated through software. You need to know when to look for the signal, what frequency knock is in for your engine, and you usually need to run the recorded data through a FFT to eliminate the crap. This is what the Link does, its way more than just a LED!
Headphones like mentioned work wonders, and your brain can even process the sounds way better than coming up with a control algorithm. Seriously, most tuners use stethascopes for a reason! Much easier!
Look up "det cans" for more info. Something like the J&S knockbox or the Phormula unit are other more sophisticated options.