Fred Nickols of Distance Consulting, and formerly of Educational Testing Service, was doing some house cleaning during December and dug up some thoughts on knowledge work. He's got a collection of other articles at his site too.
In Knowledge Work is a Myth (pdf), Nickols walks us through his thinking that all work has some component of knowledge to it, and therefore a separate category of "knowledge work" is unneccessary.
All work requires the worker to apply knowledge; all workers are therefore knowledge workers. For another [thing], most people are in the business of processing or producing knowledge albeit it mainly for their own use and consumption. Few people are in the business of processing and producing knowledge for commercial purposes.
Nickols has a point (and it has been made by others), but what I understand as knowledge work is exactly the idea that he seems to dismiss. Knowledge IS built into the things we buy and sell. Beyond the most repetitive work, everyone brings knowledge and skills to their jobs. It is that knowledge and those skills that must be used, refined, updated and applied to develop products for their employers. The point of focus on knowledge work is to make the knowledge more visible and support it. To remain competitive, organizations must continually assess and improve their knowledge base. To do this, it is much easier if this is visible, rather than hidden.