Thanks you.

One contractor told me they would have to sand the walls it then skim coat, then paint. Another guy said they dont said they add another coat of drywall on top of the knockdown. That did not seem logical to me. Have you ever heard of that?

"Another guy said they dont said they add another coat of drywall on top of the knockdown."

Correct. They fill the nooks in the knockdown with drywall mud and sand to smooth.

I'd think you'd want to skim coat with plaster rather than drywall mud. No need for any sanding post application if you've got a competent plasterer. Plaster gives a much harder, smoother surface.

If you go the add a layer of Sheetrock route you will need to replace all your trim, baseboards, door and window trim too.

Sounds like second one, is talking about putting thin drywall over the top, of the knock down, from what the op said.