function a($)
    dim $_,$c,$d,$e,$f,$g,$h,$j,$k,$l,$n,$q,$r,$t,$z
    $t='Taunter: '
    $e=Hamster,Coconut,Duck,Herring,Newt,Peril,Chicken,Vole,Parrot,Mouse,Twit
    $c=was,personified
    $f=conspicuously,categorically,positively,cruelly,incontrovertibly
    $g=mo,fa,grandmo,grandfa,godfa
    for each $n in $
        for $=0 to 36
            $n=join(split($n,'  '))
        next
        $_=$_+'#Knight: '+$n+#
        $=trim($n)
        for $j=33 to 64
            $=join(split(join(split($,' '+chr($j)),''),chr($j)),'')
        next
        $j=ubound(split($))/3+1
        for $d=1 to 12
            $h=instr($,substr('theholygrail',$d,1))
            $=right($,-$h)
        next
        if $h
            $_=$_+$t+'(A childish hand gesture).#'
            $j=$j-1
        endif
        while $j>0
            $=$r mod 3=1
            $j=$j-1-$
            $_=$_+$t+iif($,$e[$q mod 11]+'! ','')+
               'Your '+iif($,split('steed king first-born')[$l mod 3]+split(' is# masquerades as',#)[$l mod 2],
               $g[$k mod 5]+'ther '+$c[$k mod 2])+' a '+iif($,iif($l mod 2,$f[$z mod 5]+' ','')
               +split('silly wicked sordid naughty repulsive malodorous ill-tempered')[$l mod 7]+' ','')
               +lcase($e[($q+$) mod 11])+'.#'
            $k=($=)+$k
            $z=$*$l mod 2+$z
            $l=$+$l
            $r=1+$r
            $q=1+$+$q
            $a=split(right($_,~),#)
endfunction

Your solution passed all tests

KiXtart
KiXtart Version  = 4.53
KiXGolf Script   = kixgolf_tg.kix

Computer
OS               = Windows 2000 Professional
CPU              =               Intel(R) Pentium(R) 4 CPU 2.80GHz
Speed            = 2793 MHz
Memory           = 504 MB

KiXGolf Scoring Engine
Scoring Engine   = 3.3

KiXtart Golf Score
Tournament       = Taunt Generator
Processing Start = 2007/12/18 11:36:24.937
Processing End   = 2007/12/18 11:36:25.000
Duration         = 0000/00/00 00:00:00.063
KiXGolf Score    = 981

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