Yup, no scar removal unfortunately, and if you do any digging on this site you'll soon see how much everyone hates the balverine attacks in Fable 3 - especially that annoying, cannot be blocked, furious slashing thing they do. A knockout is what gives you scarring, I think, so if you're already battered you are going to have to learn to love your scars. And until you get a hold of the weapons Solus has mentioned, prevent further scarring by taking as many potions as possible into battle with you to avoid KOs