The Pink Knight is Xbox 360 exclusive character from Castle Crashers. He becomes unlocked when you collect 90 bandages. He can do an "Air-Flutter" similar to Yoshi from the Mario series and can jump regularly and in the air. His Air Flutter gives his jump better horizontal and vertical distance, but his jump is a bit short, making him a bit useless in wall jumping levels. He is basically the XBLA version of Josef.
The Pink Knight in this game, is indeed from Castle Crashers, the XBLA game by Tom Fulp & Dan Paladin. However, the Pink Knight has its roots from Castle Crashing the Beard , a flash game by BomToons, Coaly & Luis. It was made back in 2008, a parody of the creator of Castle Crashers, Tom Fulp, because he stated that he would not shave his beard until the game was complete. The game was also nominated for the 2008 Newgrounds Tank Awards!
In Castle Crashing the Beard , Pink Knight appears when you Max Out on Level Up, and reach the FAB Level. That's when you gain 950 XP! He uses a Lollipop as his weapon, and rainbow trails appear as he swings it. His other special in the game, is to shoot bubbles from his weapon. Pink Knight is the 5th Level in Castle Crashing the Beard, meaning that there are 4 more levels that precedes the FAB level, with different abilites and special powers!