I have never thought of differentiating these 2 words. After reading article in ICIMOD newletter 47, I realized the difference. Information and knowledge are quite different things. People often intermix these words.
Knowledge is the ability to take effective actions. This means that just making infromation available is not enough - to become knowledge, information has to be able to have some kind of effect.
The story from Maharastra, India (in the article) gives a clear example of why knowledge and information are different entities.
What I preceive from this article is that Information is the raw material and knowledge is the product of the proper use of this raw material. Information, in itself, does have no use at all, unless people transform information into knowledge ie putting information into practice.