Fuck you. Deport all BMWs. Straight axle master race. Send more hammers...and beer.
Following His Stigmess and DasWauto’s advice, I spent more time working on spreading the knuckle and made a little spreader tool. I took a small extension and ground the end into an oval. I stuck it in the gap and turned it with a wrench in order to open up the gap a bit more.
At this point the knuckle was loose around the strut, but I still couldn’t push the knuckle down far enough to get it off the strut. I now realized banging on the hub would never have freed the strut. You have to have the knuckle at the correct angle in order to push it off the strut. Otherwise the strut just wedges into the knuckle. I could have put a spring compressor on the strut, unbolted it, then pulled it out of the knuckle, but I really didn’t feel like putting my pretty face near a compressed spring. I squatted over the knuckle, wedged my back against the wheel well and pushed as hard as I could while holding the knuckle at the proper angle. Worked like a charm.