Major It looks like the Istio installation from the istio-system namespace is either misconfigured or there's a bug in Service Mesh here. For some reason, the sidecar injector webhook from the Service Mesh install in the istio-system namespace is being called when trying to run Knative Serving from the knative-serving namespace. You'll see in the two ServiceMeshMemberRolls (SMMRs) shown that the knative-serving namespace uses an Istio install in the knative-serving-ingress namespace and should NOT be impacted by the Istio install in the istio-system namespace.
Service Mesh should not be using the sidecar injector from the istio-system namespace for pods deployed in the knative-serving namespace as the latter namespace is not part of the istio-system mesh.
oc get configmap config-istio -o yaml apiVersion: v1 data: _example: | ... gateway.knative-ingress-gateway: istio-ingressgateway.knative-serving-ingress.svc.cluster.local local-gateway.cluster-local-gateway: cluster-local-gateway.knative-serving-ingress.svc.cluster.local kind: ConfigMap metadata: annotations: manifestival: new creationTimestamp: "2020-01-29T18:54:12Z" labels: networking.knative.dev/ingress-provider: istio serving.knative.dev/release: v0.10.0 name: config-istio namespace: knative-serving ownerReferences: - apiVersion: serving.knative.dev/v1alpha1 blockOwnerDeletion: true controller: true kind: KnativeServing name: knative-serving uid: 7d4be469-42c8-11ea-99c3-f4034358bef4 resourceVersion: "19931946" selfLink: /api/v1/namespaces/knative-serving/configmaps/config-istio uid: bd7e1722-42c8-11ea-a4ec-98f2b33ed51c
$ oc describe smmr default -n knative-serving-ingress Name: default Namespace: knative-serving-ingress Labels: serving.knative.openshift.io/ownerName=knative-serving serving.knative.openshift.io/ownerNamespace=knative-serving Annotations: <none> API Version: maistra.io/v1 Kind: ServiceMeshMemberRoll Metadata: Creation Timestamp: 2020-01-29T18:53:49Z Finalizers: maistra.io/istio-operator Generation: 1 Owner References: API Version: maistra.io/v1 Kind: ServiceMeshControlPlane Name: basic-install UID: 7dbfeccd-42c8-11ea-acc1-98f2b33e3520 Resource Version: 19931511 Self Link: /apis/maistra.io/v1/namespaces/knative-serving-ingress/servicemeshmemberrolls/default UID: af9d9cb7-42c8-11ea-a4ec-98f2b33ed51c Spec: Members: knative-serving Status: Configured Members: knative-serving Mesh Generation: 1 Mesh Reconciled Version: 1.0.5-1.el8-1 Observed Generation: 1 Events: <none>