1: No. 'Knocks' there is not the right form. It means he hits something. You need the idiom 'knocked out', e.g. '...and he was knocked out'.
2: That's complicated! Sometimes it can mean he is walking along a street that is sloped, and as he is walking his altitude is decreasing. It could mean he is walking toward the city. It could just mean he is walking along the street. You might need context to work it out exactly.