"knocked out" (colloquial) = "unconscious" or "eliminated from a competition" I think the meaning is the first one in this context because he says "while", suggesting a duration of time, not a single act.

'Knocked out' means unconscious. The speaker was unconscious for a period, and during the time that he was unconscious, various crazy things happened. When the speaker came round ( 'woke up') he noticed that one person was now in handcuffs and another was tied up.

As far as I understand from this passage, he is describing the moment which he knocked down. Knock down is a verb that happens suddenly. So it is not generally used in present progressive tense. But like this example you can use knocking down although he didn't prefer. That's my idea.