Someone used this word -- in the sense of "exhausted" -- last week, and apologised for the bad language.
I have to spring to its defence! It's used in an ironic or metaphorical way, deriving from knacker: someone who slaughters old or infirm animals, and, by extension, the animal itself.
Besides, it can't be rude -- it was used by Morecambe and Wise on the BBC in the 1970s, and you can't get much more respectable than the Beeb.
P.S. The spell checker suggests knockers or knickers!