Hi Nick,
That is quite violent at higher pressure
Just a thought, can you retard the timing of the steam valve? As you know i know nothing about steam but looking at the rather insubstantial crank and bearings i hazzard a guess there is a fair amount of free movement there to create knocking if the timing is too advanced. Or maybe the crank has got bent in the centre where it is unsupported upsetting the timing?
Apologies for sticking my nose in if you have already tried this 
Best wishes
Ade
Thank you for the help Ade, and yes it is a very violent knock. I have taken it apart enough to adjust the timing, unfortunately it's a toy and many of the parts are pressed on, so changing the timing is going to be a little more difficult than I had hoped...