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My house had / has knob and tube wiring.
Knob and tube should be called barbeque starter and tube wiring.
First off, there is nothing wrong with the knobs and tubes, in fact, it's a great idea since everything is insulated.
Problems with knob and tube:
Brittle insulation
Taped joints inside wall cavities
No ground wire
Not enough circuits in the house.
Improper boxes (non existant or too shallow to allow proper heat transfer)
It's been screwed with by others.
Difficulty getting insurance or your insurer has a weasel clause in there that says all bets are off if you have knob and tube wiring (you had better watch out for that one.)
The biggest problem is that the insulation is this tarry cloth that when exposed to heat over time will turn basically into charcoal and crumble. It simply doesn't have enough ability to deal with heat like the more modern insulations do. This problem is most obvious in ceiling mounted light fixtures where the heat from the fixture destroys the insulation leaving you with 2 bare wires. Or recepticles that get a lot of use. Either way, it's a fire waiting to happen in my eyes.
My house had knob and tube throughout and the previous owner had fucked with it, especially in the basement making it even more of a disaster. The guy was an old dude that like most old dudes scrounged for everything. He wanted to run a light circuit so he would dig around a dumpster till he found the necessary materials rather than go to Home Depot and drop 20 bucks on a roll of 14/2 NMSC.
I have rewired the entire upstairs, the entire basement, and 90 percent of the first floor and that will hopefully be gone by next year.
My advice to you would be to get your house rewired.
If you can't afford the big out lay of cash, there is a way. Find yourself an electrician and offer to pay him cash per hour to rewire your house if he is willing to let you work along side him. Tell him that you want to learn and be his helper. You will help him pull the wires, cut holes for new boxes, take the old wiring out, etc. In this way, you can eliminate the electricians helper by BEING the electricians helper.
As he gets more comfortable with you, tell him that you can at least pull the wires, route the wires, etc. while he does the connections.
He probably won't want to crawl around in the attic filled with cellulose insulation anyway.
You can save a bundle this way and learn a thing or two.
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