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The knowledge skill isn't normally used on specific individuals, unless they are public figures. Otherwise, someone who maxed Knowledge (local) would essentially know everything about everyone.
Even for a public figure, Knowledge still only works for public, though possibly obscure, information. You could know the Baron's middle name is Englebert, or his favourite mushroom is yellow chanterelle, which would be a very high DC, but not that he secretly murdered his cousin (unless that was an "open secret").
*EDIT* I suppose, though, if you had a PC who was really into stalking just one guy you could let them take "Knowledge (that guy)" as a separate skill, and let them know all sorts of obscure, kind of creepy facts about the object of their obsession...
As I recall, in 3.5 the individual also needed to be level 10 or over.
Knowledge checks are a current topic of discussion amongest the DM's in my gaming circle. It is a challenge as a DM to decide how much information and what the content of that information should be. What really is DC40 level information on a person/place/organization vs what is DC 10 or 20? What tidbit of information is so vital that it sholdn't be given to a PC with any check? How much would a PC from Korvosa know making a Knowledge (local) check in Riddleport having never been there before?
DMing CotCT I did alot of prep work constructing knowledge charts for the numerous NPC/locations/organizations etc. And in my opinion Preperation is the key to governing what information is distributed in your game. It allows you to war game the exchange and output of the check before it happens, maintains game pace, and really helps the DM better understand the NPC/Location/etc. and how it interoperates with the game.
Think about the Star Wars big "Luke I am your father" reveal. If I was DMing a game with a reveal like that, I wouldn't let that tidbit of knowlege go if the PC make a DC100 knowledge check, it would simply ruin it all!