Sure enough, replaced the steering linkage and the steering is perfectly smooth now. I did discover what the knocking noise was. The driveshaft has a grease fitting on it, and it's striking the heat shield. The driveshaft itself is iffy, so I'm going to check it out but probably pull the fitting out or dremmel it off, then plug it. That will allow me to drive the car for a little while. I'll plan on dropping the entire driveshaft later and doing a rebuild anyway. I'll have to pull it, because it appears that not only the rear main seal, but also the shifter seal are leaking on the tranny. Plus, I dropped a Z3 shift lever in it, and I need to get in there and replace the front shifter support bushing, which requires removal of the driveshaft anyway.

Steering issue

Finally found out why the steering has been so weird. I pulled off the u-joint between the steering box and the steering column and it was completely trashed. Barely able to move in one axis, and completely frozen in the other. Unfortunately this is a dealer-only part, and it always takes them a while to get it, so I probably won't have the part for at least a week....bummer.