IMHO, neither. I have read it this way: Knuth thought that Jobs is insincere manipulator who tells people what they want to hear instead of just facts, and Knuth doesn't like that.
Pretty much how I read it though a bit overboard in characterization.
The story comes off to me as: Knuth calling Jobs out for flattery/embellishment. I bet everyone Steven Spielberg meets tells him he's their favorite director and they've seen all his movies. But if you look at the numbers for Empire of the Sun that just isn't possible.