Much gratitude for all the helpful comments and information. A few other details:

The IP was timed with the old timing chain in place.
The valves were adjusted then.
Then rolled in the new chain.
Then put in the injector nozzles. They were balanced using the ************** pop tester. BTW, one old injector dribbled fuel and erratically sprayed, sometimes releasing at 1500 psi, other times at 2700 psi. All rebuilt injectors did not leak, had good spray patterns, and were balanced. I thought the knock would go away, but it did not. Definitely got better.
The turbo shaft does not have play in it.

From the suggestions from the forum, I will:

Recheck valve clearances (doubt this is the culprit)
Recheck IP start of fuel delivery (doubt this too)
Replace valve stems seals (the smokey exhaust is really, really bad on startup, and becomes just really bad when warm)
Re-examine the vacuum system for leaks.

Once again thank you for all the information.
I will post the outcome of this when completed.
Will