Over the cobbles he clattered and clashed in the dark inn-yard, He tapped with his whip on the shutters, but all was locked and barred;
The highwayman comes into the dark courtyard of the inn, making a lot of noise on the paving stones ("the cobbles"). He taps on the shutters that cover the windows, but everything is locked up, so he doesn't get any response.
He whistled a tune to the window, and who should be waiting there But the landlord's black-eyed daughter, Bess, the landlord's daughter, Plaiting a dark red love-knot into her long black hair.
Trying again, he gives a whistle, and the landlord's daughter Bess shows up.
Apparently she's pretty good looking too, and the speaker spends some time telling us about her black eyes and long black hair.
When the highwayman shows up, Bess is braiding ("plaiting") a "love-knot" into her hair. This love-knot would be some kind of ribbon, tied in a knot to symbolize her love for (you guessed it!) the highwayman. The knot is dark-red, a color associated with love and passion, but also, of course, blood. More on that later.