That is exactly what is happening. My roommate had an 02 SC as well, and we tried several different bolts on the SC before realizing this. I believe he ended up bolting it to the ground on the block or some bolt near the PS pump. It ran fine after that but I don't like not having the knock protection. Although while running mine bypassed on the firewall I never heard it ping as I have on other vehicles in the past. Also if you check the diagram in the FSM, you'll see the harness to the sensor is actually a shielded harness, I believe it turns into that after the green connector on the valve cover.I guess I stand corrected.
After re-reading your initial post. Did you replace the sensor, or just relocate it?
One of the possible issues you're having is that the new location may be picking up excessive noise from the supercharger. Try moving the location to where 2002XterraSC describes, reset the codes and see if the problem is solved. You could also try to find a location that is actually on the engine block, which is preferable.