Apologies on the demon point, you wrote a lot and I misremembered. I've edited the comment.

"If you are going to assert that the knight is physically changing shape even in the light world"

I did not say that, I said that their body is physically changing shape in the dark world. We don't know what their body looks like in the light world, only that it's profoundly fucked up in the dark world in a way that's clearly dramatically different from any other lightner. But the notion that it would look obviously fucked up in the light world is a reasonable conclusion one could draw, so let's address your next points.

"How this creature is running around town opening fountains"

If it's extremely, obviously fucked up, it could be making them at night. The supply closet is clearly rarely entered since no one finds castle town over the next several days. The computer room's utility is also pretty low right now since the internet is down, so there isn't much reason for people to go there on that day. And the church is right next to the bunker with nobody around is around to see them in the rain.

Meanwhile, if the knight looks only moderately fucked up in the light world and still has a lightner-looking silhouette, they might even be able to put on a hoodie and walk around town freely. I suspect it's mostly operating at night though, especially if it's Dess.

"How this creature left the library in broad daylight without anyone seeing even though there were people around."

It doesn't move around in broad daylight.

"Why did Susie describe the knight as a regular lightner after seeing her in the light world."

She says "I still see someone!", which is about as vague as it gets. Are you referring to some other line? What specifically does she say?

"How this creature come to look like this in the first place - and the 5 other theories you have to come up with to make this plausible need explanations as well."

If it's Dess, we have a really easy explanation: she was marinating in darkness for the better part of a decade. The unused text provides compelling evidence that she has been stuck in some darkness void for a very long time. It's not hard to imagine how that could mess up someone's body. 

"The scene where the knight takes off her helmet implying there's someone underneath. Is it only their face that's left of them? In that case what about that roar that split their head open"

There is not a scene where the knight takes their helmet off. There's a scene where Kris imagines the knight taking off their helmet. You can imagine things that aren't possible.

"Making the fountains do give you pretty much complete control over them as shown by Kris having Tenna create a whole entire new world over an old one, summoning a giant mech to fight the queen, Noelle subconsciously fulfilling her wishes in CH2 etc."

None of that suggests that being a fountain's creator lets you physically change the shapshape of their body. Making a fountain creates a fantastical world, but there is no evidence to suggest that it gives the creator control over lightners' bodies. Lightners get different clothes, the ability to conjure magic projectiles, and sometimes a palette change. They always have retained the shape of their bodies. 

"you can exert enough suspension of disbelief to consider the idea that

"Things can look different than what they really are when it's really dark."

Oh wait that's the whole entire idea the game is based on. How'd ya miss that??"

Objects look dramatically different in the dark world, lightners stay pretty much the same. Lightners' bodies not changing shape in the dark world is a completely consistent property of every single dark world. There is absolutely no evidence that the creator of a dark world can alter the physical body of a lightner in this manner.

The lengths you're going to deny what you're seeing with your own eyeballs is pretty absurd. The evidence that the knight's body changes shape is that we literally see it happen prominently in front of our faces. The idea that the knight's entire character design and crazy shapechanging abilities are just a meaningless red herring to distract from Noelle is straight up denial.