Have a 2000 ES300 that check engine light stays so I went to Advance Auto and Cole Muffler both say knock sensor #2 needs to be replaced.At the same time my OD stopped working,the car will not get out of third gear,are these two issues related?

 

A lot of times, the computer will limit certain things when codes are present. So they may very well be connected. I would fix your knock sensor issue.. and recheck

 

Yes, fix the Knock sensor and that will fix your OD too. I had the RX300 doing the same thing.