Knock problems
Sooo, if you can hear it, then you are probably getting somewhere around or over 5 KR. This is going to drop your overall timing at WOT from ~27 to around ~22. Timing is kind of a cascade effect, and the more you loose the more hp you loose per deg. On my last dyno, I lost ~10 HP from 3-4 deg timing, because the car started to choke at 5300 rpm rather than pulling to my 6000 peak HP. With just a little KR, you can leave alot of HP on the table.
Running excessivly lean is a big contributor to KR. However, there are some other things that you may want to look at. I see that you are still using the stock valvetrain. On the stock valvetrain, I had some pretty bad float problems around my stock redline. Carbon buildup in the combustion chamber is another contributor, especially with the older LS1's. If your car burns oil, you may want to consider running some top-end cleaner to see if that eliminates the detonation.
And last but not least, you need A-tap or another form of data recording device if you purchase LS1 Edit or run an MAFT.
Good Luck
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