You might be right about the metaphysics of stories. But I'm inclined to say that Knight's point was different: literary criticism should not (primarily) aim at discerning what is true and/or knowable in the relevant fictional world. And on that point, I agree with Knight. Obsessing over the question, "What is Hamlet's problem?" is the job of the viewer. The job of the critic is, inter alia, to ask, "Why are viewers so obsessed with the question, 'What is Hamlet's problem'?"
You might be right about the metaphysics of stories. But I'm inclined to say that Knight's point was different: literary criticism should not (primarily) aim at discerning what is true and/or knowable in the relevant fictional world. And on that point, I agree with Knight. Obsessing over the question, "What is Hamlet's problem?" is the job of the viewer. The job of the critic is, inter alia, to ask, "Why are viewers so obsessed with the question, 'What is Hamlet's problem'?"