Suburu knock sensor, Ignition retarding Options

[jiranz5]

I apologize for this not being a 6g topic but am kinda stuck as to what to do so any productive info will be appreciated. Anyway, here's the story:

My dad owns a 1992 Suburu Legacy GT with something like 350,000kms on the clock. Recently the ignition has started being retarded and upon moving the knock sensor to a new location has reduced the problem. Another factor that reduced the problem was using a higher octane fuel. Does anyone know how to fix this problem or even bypass the knock sensor? Removing the knock sensor enirely doesn't work. Also he is running a twin WRX chipset system (however that works).