You can try a plunge router or a table saw with a dado blade.

I would just use a drill press and a chisel.

Or if you are looking to spend some cash you can get crazy.

:O hi jp :D

Thanks guys~

And if you do use a drill press wrap a bunch of tape (masking) around the bit to limit its depth.

This helps a lot, now I know what tool to beg my general contractor to use :P

I would go with @augustlan and say it is more of a router thing, if you did not have a router you could set a skil saw shallow ans make about 4 parallel plunge cuts and hollow it out with wood chisle.

Cheapest and simplest method is a chisel. If you have access to it, a router would do the job except for the square corners.

There is a square jig that fits in the drill press. Kind of a square chisel thing with a big fat drill in the middle.

@majorrich

Yeah, a mortising jig. I have been wanting to try one of those, as I have a drill press but not a plunge router. I do hear you have to chisel out the corners to clean them up, though.

I did use a table saw with a dado blade to do something like this in class, but it was for a big headboard; might not work well for something as small as a knife block!

Tomorrow my contractor will be bringing a router by, and I will fix his laptop! Fair trade!

Happy ending, thanks everyone, very much!