, not a mechanic and certainly not as knowledgeable as Blackberry but in your position if you're not gonna bypass the knock sensor, do the following things:
Set your timing between 6-8 degrees -- I think stock is 10. I have mine set at about 12 and I have no issues.
Run the highest test gas you can for the drive down, and put a can of octane booster in there. If the octane booster is too much, consider getting PURE toluene, which is Octane 104. It's obtainable at paint stores:
Toluene is an aromatic hydrocarbon solvent often referred as methylbenzene. Toluene is widely used in industry, often served as a substitute for benzene. Methyl side groups present in toluene makes toluene metabolized differently than benzene. Toluene is well absorbed through the lung, with a...
Gen 1 Xterras have metal intakes so diluted properly this will not be a problem, AFAICT. I am not responsible for motor damage.
But, more seriously, do a proper knock sensor. At least locate it somewhere on the back of the block or extend the wiring to the front of the block. Just don't bypass with a damn resistor... That's asking for trouble and if you run 85/87 while towing, even with retarded timing, kiss that motor goodbye.