The Palette Knife 
interacts with the mass of medium
on the canvas. Generally it would only interact with strokes placed by
the Oil Brush given that it is the only tool that apply large amounts
of its medium. As the mass of the medium reduces in a spot, there is less
to smear and using the Palette Knife has less effect. This means that
Crayon, which applies very little medium, will only be slightly affected
by the Palette Knife.
The method of loading or cleaning the Palette Knife mirrors the Oil Brush in some ways. You can clean it automatically after each stroke, retain the color picked up from the canvas, or allow manual cleaning. The Palette Knife can be used to apply pigment or smear it, depending on user preference.
Paint strokes applied by the Oil Brush and Palette Knife are, by default, wet in terms of how strokes interact with other strokes by smearing/mixing together. You can, however, choose to dry the Art Media layer at any time. Conversely, you can choose to make a dry Art Media layer wet again:
Choose Layers > Dry Art Media layer (or right click on the Layers palette and choose Dry Art Media layer from the context menu) to dry the strokes applied by the Oil Brush or Palette Knife.
Choose Layers > Wet Art Media layer (or right click on the Layers palette and choose Dry Art Media layer from the context menu) to make dried Oil Brush or Palette Knife strokes wet again.
Note: Both the Dry Art Media layer command and the Wet Art Media layer command can be selectively undone in the History palette.
Palette Knife tool options include:
Shape: Choices include Round or Square.
Size: Defines the size of the tool head in pixels. Note that you can also adjust the Size setting via the keyboard.
Thickness: Defines the aspect ratio of the tool head. Note that this setting is only active when the Fixed angle Head Tracking option is chosen.
Rotation: Defines the angle of head rotation in degrees
Head Tracking: Choose Track path to have the brush head bend around the path of the stroke, or choose Fixed angle to have the brush head remain at a fixed angle.
Head Loading: Defines (in percentage) the amount of material on the brush at the start of the stroke.
Auto Clean check box: When marked, this check box simulates cleaning the tool and dipping it in fresh paint at the start of a new stroke. When unchecked, the tool head is not cleaned at the start of the stroke. Instead, the "dirty" head has a small amount of the current color added to whatever dirty head state exists from the previous stroke.
Clean button: Click this button to clean the head and start the next stroke with fresh paint/pigment. Note that this button is only active when the Auto Clean check box is not marked.
Trace check box: When marked, the Palette Knife tool will select the pigment/paint color by sampling the data below the center of the tool regardless of the layer type. (This feature works much the same way the Clone Brush's Sample Merged tool option works). When you hold down the mouse button to begin the stroke, note that a single sample is performed, and the resulting color is used for the duration of the stroke.
Like other Paint Shop Pro tools, the Palette Knife tool comes with presets. To use a preset:
In the Tool Options palette, click the Presets button. This displays a list of preset styles.
From the list, choose the desired tool preset.