She is said to have become infatuated with Douglas and bombarded Zeta Jones with death threats through a series of terrifying letters and menacing phone calls.
The letters were sent to Douglas’s frail 87-year-old father – Hollywood star Kirk – the Los Angeles court heard.
One card, which had a picture of the actress, included an invitation to her funeral which read: 'Homegrown celebration for Catherine Zeta Jones. Obituary Mrs Catherine Zeta Jones. Goodbye to the solemnized. ASAP – Time. Place – Catholic church, Wales.'
Fourteen of the letters sent to Kirk Douglas and his wife, Anne, also included threats to kill the actress and an accusation that she was carrying George Clooney's child. In another letter, Knight pretended to be Zeta Jones’s ex-boyfriend, TV presenter John Leslie.
That note read: 'You need to let Catherine know if she hurts Michael I will hire someone to kill her.'
Douglas told the hushed courtroom telephone threats were made to his wife’s hotel room while she filmed the movie Ocean's 12.
She had called him on the way to an airport and was 'hysterical'.
Douglas, 59, added: 'She was fainting and couldn’t get any air. She showed all the signs of having a nervous breakdown. She said to me "I have to see a doctor" and was very emotional.
'I made a lot of calls and found an English speaking doctor who I took her to see directly from the airport. He gave her medication.’
Douglas said his wife started to get better after two days but was ‘confused with what was happening’.
After the couple heard police had arrested a suspect, they were both ‘very emotional' and Zeta Jones 'just cried for happiness'.
'We were relieved. We were both very emotional and we felt extraordinary relief.'
Pressure had been continually building – we felt we had to look over our shoulders all the time.
Douglas described how the threats started in March 2002 with a telephone call to the Ariel Sands hotel in Bermuda.
He said: 'I asked the receptionist what the person on the phone had said ... she said that she was going to kill Catherine.
'I was shocked, scared and stunned. I asked her to keep it quiet. I did not want to create a furore and I did not want to create gossip. My experience was that it was best to keep this as contained as possible.'
Knight was arrested in June after a dawn raid at her Beverly Hills home and is being held on £540,000 bail.