Knocking and Dropping!

I've got a couple of problems with my bike, I think they are related but I am not sure.

So a few months ago a knocking noise started to come from the engine area of the bike while I was riding. It only did this when the bike was in gear and the clutch out. With the clutch in or the bike out of gear there was no knock. The frequency of the knocking increased with the rpm rather speed of the bike but not proportionately like it might be if it was something on the chain or similar. The knocking was also intermittent in that it wasn't there every time I rode the bike, just most or the time and often started again after going over a bump. I did find that a good coating of chain lube stopped the knocking for a bit. The noise itself almost sounded like a dropping noise.
A friend mentioned to me that his mate had a similar problem and it was the 'clutch basket' and a £500 job to have done in the shop. I've never heard of a 'clutch basket' myself. I think it is something to do with the gears, sprockets etc.
The second problem is the bike has come out of gear a few times. At first it did this when I went over a speed bump and I though maybe my big hulking Conan foot must have bumped the gear lever by mistake but the bike has come out of gear a couple few times since. Twice when I have been overtaking and a few times when I have been accelerating down the road. Thus it appears to be when the engine is under increased stress.
Now I believe both these problems are related and are something to do with the gears. If anyone can offer some advice on what it might be, where to go to get it fixed and not get stitched up, etc, etc.

My bike is a standard SV650 SK4 with just under 30k on the clock.