IIRC, Michael Knight overrided KITT because KITT is ready to swerve away to prevent a head on collision with KARR. MK took the helm, and KARR swerved at the last moment (can't remember what happened after that). MK knew that KARR would not go head on with KITT. His reason, because of the defect, KARR's function was self preservation. KITT's function was to protect MK and/or his passenger/s. So MK took the risk of going for a head on collision hoping that KARR would chicken out. MK was right.
I remember one episode where KITT was actually dissolved in acid or some liquid solution. And the repaired KITT was actually traumatized.