Central defender Mirfin, 27, made 19 appearances for the Iron after arriving from Watford in February, scoring once, and helped shore up a leaky defence.
He first arrived at the club in 2008 when Scunthorpe paid Huddersfield £150,000 for him and, after 101 first-team appearances, moved to Watford on a free transfer last summer.
Knill told the club's official website: "I was with Sean Dyche (Watford boss) on Saturday and he said they plan to keep Dave there. At the end of the day he's their player and that's their choice. But we have looked at other alternatives and are continuing to do so."
Knill confirmed his interest in bringing back Wolves defender Jamie Reckord, who made 17 appearances while on loan for the last three months of the season, but was unsure about the 19-year-old's future.
"Jamie is a top player," he added. "With Wolves having gone down and with a new manager coming in he has the chance to shine there. I'm sure they will want to have a look at him in pre-season before they make any decisions on if he can go, but if they decide that he can go out then we would love to have him."