3sgte detecting knock! Options

[toyotacrazy]

Ok, so I installed the "Easy Knock Detection System for the 3sgte". It works great. My car is fine when its cold or cool outside. But if the temp. outside gets to be above 70*F Sometimes the red light will stay on while under boost, thus detecting a knock issue. Usually this happens after sitting at a light for a few minutes. In my profile the picture under the hood, I dont have any heat protection on the intake pipe going over the exhaust manifold. I did however wrap it with header heat wrap several months ago.
Im still running the stock exhaust. Im working on ordering a 3" mandrel exhaust. Could the exhaust be contributing to my knocks? My car wont boost normally with the stock exhaust hooked up. I only hit 7 psi and during the rev to redline, I drop to 4 psi. When I disconnect the exhaust Im boosting to 9-10 psi. and it doesnt drop pressure.
Any advice would be greatly appriciated. Thanks
-toyotacrazy