I was reading the "Tale of Ragnar's sons" for another reason today, and found this piece:
Sigurd Snake-in-Eye married Blaeja, the daughter of King Ella. Their son was Knut, who was called Horda-Knut, who succeeded his father in Zealand, Scania and Halland, but Oslo Fjord broke away from his rule. Gorm was his son. He was named after his foster father, the son of Knut the Foundling. He governed all the lands of Ragnar’s sons while they were away at war. Gorm Knutsson was the biggest of men and the strongest and the most impressive in every respect, but he wasn’t as wise as his forebears had been.
In Old Norse:
Sigurðr ormr í auga átti Blæju, dóttur Ellu konungs. Þeira sonr var Knútr, er kallaðr var Hörða-Knútr, er ríki tók eptir föður sinn í Selund, Skáni ok Hallandi, en Víkin hvarf þá undan honum. Hann átti þann son, er Gormr hét. Hann var heitinn eptir fóstra hans, syni Knúts fundna. Hann helt allt land af sonum Ragnars, meðan þeir váru í hernaði. Gormr Knútsson var allra manna mestr ok sterkastr ok inn mesti atgervimaðr um alla hluti, en ekki var hann svá vitr sem verit höfðu inir fyrri frændr hans.
http://www.germanicmythology.com/FORNALDARSAGAS/ThattrRagnarsSonar....
So now we know at least where the idea that Knut was the son of Sigurd Snake-Eye comes from.
(Not sure what the scholarly opinion of the age of Ragnarsona þattr is).
The question is here. Is the story taken from a different text. Some say that it was taken from an earlier text, so there is a likelyhood that errors have gotten into the text. Misunderstanding of how the things where really connected.
There has been discussion on another text if it the translation is correct. On Hardeknud Sveynsen. Is it to be translated son of Sigurd Worm in Eye or is it descendant of.
That makes a major difference.
But yes It is clear were the notion comes from. This kind of error has a tendency to repeat itself.