The CEL flashing is an active engine misfire on 1 or more cylinders. The OBDII will typically show a code for this, sometimes specifying the plug(s) at fault. Could be the plug, wires, coil, or injector.
The knocking - is it like spark knock or dieseling? That could be due to the misfire, or another problem. If it is an engine rod type of knock, then you might have other serious issues. Being 1 quart low won't necessarily cause knocking, but if run low for long periods, it could cause damage.
Get your vehicle to a mechanic, hopefully the misfire is all that is wrong.