Diedrich Knickerbocker is the epitome of an unreliable narrator. Let's put it this way: we're pretty sure everything he says is a lie.
Knickerbocker was actually one of Washington Irving's pseudonyms. Irving's first major work, A History of New-York from the Beginning of the World to the End of the Dutch Dynasty (sounds thrilling, no?), was written as if they were the personal letters of this Knickerbocker fellow. Irving started a pre-Internet viral campaign and convinced the readers of New York newspapers that Knickerbocker was an old Dutch Historian who had gone missing, leaving behind only his manuscripts. As opposed to today's viral showstoppers, this scheme gave Irving some serious literary clout.
Enough backstory. In "Sleepy Hollow," Knickerbocker makes another appearance. He's the one who writes down the story that we're reading—so you could argue that he is the narrator. On the other hand, he is writing down "almost in the precise words in which [he] heard it related" (2.1), the story of an old man he met in Manhattan.
Hmmm. We're a little wary—"Sleepy Hollow" is incredibly detailed; it would be tough for him to remember that all from one storytelling. But even if we give him the benefit of the doubt there, we still have no idea who to blame for how clueless the narrator seems. Who's the old Manhattan man? And why didn't he tell us what Katrina told Ichabod that night?! Yeah, we're a little frustrated.
Head on over to our "Narrator Point of View" section to think even more about the literary somersaults Irving is doing in our brains.