Hey. My 2003 A4 1.8t is smoking grey and knocks on the top end pretty bad. Has anyone had this experience? Any ideas?

 

smoking grey would probably mean coolant. how is your coolant level? Haven't had this issue but I'd check that first.
Just a quick google check:
White/Gray Smoke: White exhaust smoke is an indication that coolant is burning in the combustion chamber. These are possible causes:

Cylinder Head: A crack in the cylinder head (around the coolant jacket) will cause coolant to enter the combustion chamber.

Engine Block: A crack in the deck of an engine block near the coolant jacket will cause coolant to enter the combustion chamber.

Head Gasket: A damaged or blown head gasket will cause coolant to enter the combustion chamber resulting in white/gray smoke coming from the tailpipe.

Good luck

 

It sounds like dirty/thin oil to me. Drain the oil, put new one that is thicker like 15W40 or 10W40.
It is possible that one of your oil rings is stuck, and thicker oil may help.