Here I go again, not being sure how different our two engines are but: My 96 has two knock sensors, one each side of the the block. The knock sensors are in the block, not the head. Your car may have two knock sensors too, both will be in the block. Don't let what someone else told you continue to confuse you. Kick it to the curb.
On my 96, the Knock Sensor module is accessed from the underside of the PCM. Many guys swap the LT1 module for the one which came in the LT4. The L4 module has been reprogrammed and is not as sensitive to false knock. Knock, whether actual or false, will cause the PCM to retard the ignition timing. The LT4 module is a direct swap; nothing else need be done.
Some even splice a resistor into the knock sensor wire to FOOL the computer into thinking all is well. I did it on my 415 86 Vette and it works like a charm. The resistor allow the voltage the PCM is looking for to always be there, so no knock retard of timing will take place.
On L98s, one of the senders in the passenger side head is for the dash board coolant temp gauge and the other is to turn on the fan. GM changed that arrangement at some point, but I forgot when, but in any case, what's in your head is not a knock sensor.
Knock sensors look entirely different, so they can't be confused with a coolant temp sender. Just unplug the wire to the coolant temp sender in the head and your coolant temp gauge should either peg or show no temp at all. I don't even have anything screwed into my driver's side head; other than a plug in the hole. No sender or sensor. I'll check my son's 96 later today to see if his is the same.
Your IAC pintel could be stuck or sticking. You can unscrew it and remove the pintel with your hand by pulling on the pintel (the tip) with moderate pressure which rocking it from side to side.
Once out, you clean off any carbon buildup, then re-insert it using reverse pressure. The pintel should be re-inserted until the tip is no more than a certain distance extended. If it's extended too far, it'll bind. Seems the distance is 1-7/8", but someone should verify that distance for us. Anyone Know for sure??
I have to go from memory on this, too but there is a way to manually reset the IAC.
If I remember correctly, you turn the ignition key to ON but don't start the engine. Then, with the key still ON, you unplug the IAC. Now you start the engine - with the IAC still unplugged; the engine may take a coaxing to keep it running since the IAC isn't working to control idle speed. Then set your desired idle RPM with the TB screw, then shut down the engine and re-set the TPS voltage (TPS voltage is set with the engine OFF, key ON). Then plug in the IAC; the restart the engine. You then drive the car a normal speeds and the IAC automatically re-adjusts itself.
It's been a long time since I did a manual reset and even then it was on a L98 engine, not a LT1; the procedure should be the same though. I believe I posted the exact procedure on the CorvetteForum (forums.corvetteforum.com) several years ago in the TECH TIPS section. The procedure may even be posted here.
I do recall that if the IAC is plugged back in while being unscrewed from the TB, the pintel will shoot out, across the room, LOL Ask me how I know.
If you want to track down that tip - and MANY others as well- go to the CF, then to the C4 section. At the top of the page there are several buttons that have drop down menus. One of those menus is entitled Tech Tips; the procedures are listed in there.
There's a vacuum bib directly in the center of the intake manifold, right under the TB. On my engine it's for the PCV. Check it to make sure the bib or rubber hose isn't leaking. Many times the hose will come off or dry out, crack and cause a vacuum leak.
I hope some of this helps solve your problem. I figure if we brain-storm this enough it will eventually lead us to the cause.
West Point ROCKS!
My son, Ryan M. Cameron, graduated from West Point on 22 May 2010! He was commissioned as a 2nd Lieutenant and I pinned on his first pair of "Butter Bars" PROUDEST DAY OF MY LIFE!!
1996 Vette, 388 CID LT1 (3.75" X 4.060"), Eagle Internally Balanced Forged Crank, Eagle 6" Forged Rods, SRP Forged Pistons, CompCams XFI 467 Cam (230/236 @ .050), Scorpion 1.7 RRs, AFRs ported to 212 ccs (304 cfm @.600), Match Ported LT1 Intake, SVO 30# Injectors, BBK 58mm