This episode has to be one of the best of the whole series. When Michael lies in that hospital bed after almost getting killed, telling KITT that he isn't sure what life, if any, he wants to resume, it all seems kinda farfetched and weird at first. After all, he had gotten shot at and wounded severely many times before and that had never stopped him from jumping right back into action. But then come all those sweet emotional scenes that make you just wanna say "awwwww" all the time and make this episode so great, and you forget about the seemingly small incident causing Michael's hard decision.
The scenes between Michael and KITT in this episode are some of the best of the show. Michael trying to say goodbye to his pal made me wanna cry and KITT, who even after Michael's goodbye just doesn't leave his partner's side shows his most human side ever. The scenes of Stevie and Michael enjoying themselves on the beach, and the marriage might be considered to be a bit cheesy (poor KITT! They attached tin-cans to his backside!), but at least they go perfectly with David Hasselhoff's acting, and at least provide some funny moments to this otherwise more sad story.
And those who think this isn't really a true Knight Rider story up to this point, for Michael is only a shadow of his former self, get their money's worth during the last few minutes when Michael beats the living soul out of the bad guy.
The episode ends with Michael at the beach, allowing himself to dwell in the thought of his love Stevie one more time, with KITT staying close by as always. He then runs to KITT, after whose hopefull question of where they'd be going now, he tells him they're going home again, to family, to the the Foundation.
This could have been the perfect ending for the series. Why they chose to show it in the middle of the season is totally beyond me. It closed up the Michael/Stevie arc beautifully.