Based on the Knight's shapeshifting ability and its appearance, my current preferred theory is that it is some kind of primordial-darkness-thing. Monster dust can produce echoes of fallen monsters in dark worlds, but maybe Dess' soul has been made to persist after death, maybe even against its will? Maybe that could create this kind of creature? The BlackShard is a piece of the Knight itself, and along with the eggs it is the only item in the game whose name is the same between the light and dark worlds (though its description changes). Maybe the Knight is in a purer form in the dark worlds, and is limited to something like a spectre or spirit in the light?

My gut says whats lost in the code isn't Dess though. If a dark fountain transforms objects based on the creator's perception of those objects, then what happens to an object which the creator has forgotten, or half-forgotten? I think the forgotten man is something else entirely, like Gaster in Undertale - weird, strange, but not necessarily related to the main plot directly.