I never made knobs for a guitar specifically, but I have made a bunch of knobs for other things, especially electric fans, appliances, jigs, and electronics. It seems like I am always repairing stuff. You don't really need to get fancy with the attachment for your guitar pots. We are talking about a basically round shaft with a flat on one side, right? I just make a round hole and don't worry about the flat. If you turn the hole with a tiny scraper made from an allen wrench or a concrete nail you can make a nice friction fit, and that's all you need 90 percent of the time. A couple times I had an off switch that was kind of tough and found a couple ways to make the fit stronger. The easiest was a tiny drop of hot melt. If you ever need to remove the knob, a few seconds with a hair drier loosens it right up. That didn't work on a fan I had in the shop window in the hot summer sun, so I turned a tiny dowel the size of the hole, cut a slice off to match the flat, and glued it in the hole with yellow glue. Worked like a champ. A couple other times I made the hole a little too loose and was too lazy to try again, so I rubbed in a layer of yellow glue with a toothpick and let it dry, then did it again and let that dry. That made the hole just enough smaller to give a nice friction fit. If you want to get fancy with set screws and such, go for it, but it isn't necessary.
If you decide to use a set screw, you generally don't really need to use an insert or even tap the hole. I have had great success making the hole just a little small so the threads of the set screw bite into the wood a bit. That's plenty good unless you need to remove the knob often, but I don't exect you'd be doing that with a guitar knob.
I had a good chuckle one day when I was at the Wood Emporium in Loveland. I was chatting with Loren, the owner, when a couple guys came in that I recognized from one of the local turning clubs. They were making some woodworking jigs for their shops and BOUGHT some knobs. I couldn't believe it. They were woodturners, for pete's sake. They could have made the knobs faster than making a trip to store, saved the money they spent, and had the fun of turning their own knobs. Go figure. Maybe they had an ulterior motive, like perhaps it was an excuse to tell their wives they had to go someplace, and it just happened to be near Baskin Robbins.
-mike paulson, fort collins, co