The Iron were slow out of the blocks against Wednesday - the story of their season so far - and trailed by two goals inside the first 17 minutes.
They fought back in the second-half, with goals from Bobby Grant and Mark Duffy, but left South Yorkshire on the wrong end of a 3-2 scoreline.
“I thought we were excellent and I was delighted with their attitude,” he said.
“We more or less camped in their half in the second-half and it could have easily been 3-3. We finish every game like we finished.
“It isn’t how we’re playing, it’s poor decisions that are costing us. I think it would have been a different game if we’d had that penalty.”
The penalty claim Knill referred to came shortly after Gary Madine's fifth-minute opener, when referee James Linington awarded a spot-kick for David Prutton's challenge on Chris Dagnall.
He then reversed his decision, on the advice of an assistant, after pressure from the home players.
“I’ve never seen a referee consult a linesman if he’s got a clear view. It's got to be his decision," said Knill.
“The referee had a clear view, awarded a penalty and then consulted a linesman. What’s the point? We might as well not have a referee because he’s on the field to make decisions."
Gary Megson, the Owls boss, took an opposing view on the incident.
“I didn’t think it was even close to being a penalty in the first place. The linesman was strong in telling the referee he’d made a mistake," he said.
“There were times when we were under a bit of pressure and Scunthorpe had the odd opportunity The lad Dagnall was causing us a few problems and our defensive display wasn’t as solid as I’d expect."