As I entered in Knowledge Management I quickly found there didn't seem to be a lot of sources that seemed to make sense in terms of defining what knowledge actually was, and how was it differentiated from data, information. What follows is the current level of understanding I have been able to make together regarding data, information, knowledge, and wisdom. I figured to understand one of them I had to understand all of them.
The content of this system can be assumed the following chain of action:
Data: It comes in the form of raw observations and measurements. Data is anything. A text is a piece of data. In fact, letters and characters, any alphabet like digits, special characters and even pictures, figures, recorded sounds and animation are examples of data.
Fig 3.1 From data to information to knowledge
(Source:http://searchdatamanagement.techtarget.com/generic/0,295582,sid91_gci1283796,00.html)
Information: when contexts have been put between data, I meant to say that when you give meaning to the data by way of relational connection data becomes information.
Knowledge: Information emerges into knowledge when information is given meaning by interpreting it adding some skills and own experience, reasoning and reflection. There is considerable confusion between the terms 'information' and 'knowledge'. It is helpful to think of knowledge as being of two types:
Explicit or generally available knowledge: This is knowledge that has been captured and used to develop strategies and operating procedures for organization.
Tacit or hidden knowledge: Within the organization there are certain people who hold specific knowledge which is called tacit knowledge.
Clearly, both types of knowledge are essential for the organization. Information on its own will not create a knowledge-based organization but it is a key building block. The right information fuels the development of intellectual capital which in turns drives innovation and performance improvement.
According to Russell Ackoff(1989) also, data is raw. It simply exists and has no significance beyond its existence. Information is data that has been given meaning by way of relational connection. Knowledge is the appropriate collection of information, such that it's intent is to be useful by proper understanding and wisdom. Stenmark [2002: chap. 3] says: It has often been pointed out that data, information, and knowledge are not the same.Especially the terms knowledge and information are often used interchangeably, but these two are far from identical. Davenport and Prusack's say [1998, p. 1]: "Knowledge is neither data nor information, though it is related to both, and the differences between these terms are often a matter of degree." Davenport and Prusak state that: “Data is a set of discrete, objective facts about events…Data describes only a part of what happened; it provides no judgment or interpretation and no sustainable basis of action…Data says nothing about its own importance or relevance.” According to Davenport and Prusak, however, data turns into information as soon as it is given meaning. Information must inform: “it’s data that makes a difference…Unlike data, information has meaning …Data becomes information when its creator adds meaning” . Davenport and Prusak maintain that “knowledge derives from information as information derives from data” . (Source: Davenport, T.H. and L.Prusak [1998] Working Knowledge: How Organizations Manage What They Know. Boston: Harvard Business School Press)
For example, suppose a person named K, who does not know anything about French language, sees a text with 2 columns. In the first line, there are some texts; in the subsequent lines, there are in the left column some texts, and in the right column some 2-digit numbers like -2, 12, etc. K doesn't have the idea what the whole text represents, that is, for her it is simple data. Now, suppose a French person explains to K that the texts in the first line mean "City" and "Temperature", and explains what city names are represented in the first column, like Paris, and tells K that the table represents the average temperature of the previous day in those cities. Now K understands what the table means: she merges the data from the table as information and can get ideas how cold or warm it was in Paris. In this sense, if someone reads a manual, e.g. a guide book about French language, she acquires information about French language but no knowledge about it. In the case of knowledge, it does not depend just on a personal interpretation, as with information, because it requires a personal experience, some skills with the object of knowledge. But after learning this language and understand it properly with doing exercise and gaining, she can tell that what has been written in the table with her own skills, experience about this language and interpreting the information then it becomes knowledge for her.
However, other of my class groups argued that knowledge can be at every stage. According to their point of view data can be knowledge, information can be knowledge. They describe that by following figure:

Figure 3.2 knowledge can be data, information
There is still debate on the difference between the above three terms (data, information and knowledge).Such many people are using the words interchangeably. What is data to one person is information to someone else. Same for information and knowledge, what is information may be knowledge for someone else. According to me, these words are different, they mean different things. And the most important is what matters are the concepts and your ability to use data to build meaningful information and knowledge.
Stenmark, D. [2002]. "Information vs. Knowledge: The Role of Intranets in Knowledge Management". In Proceedings of HICSS-35, IEEE Press, Hawaii, January 7-10, 2002. Available at http://w3.informatik.gu.se/~dixi/km/.
http://choo.fis.utoronto.ca/KMfaq/