I think for what you want to do selecting an edge and choosing W > Subdivide may be a better less prone to failure workflow.
In you current case it is hard to tell from the screenshots why it is failing, it may be because of you current view angle. Try rotating the view more towards being perpendicular to the face normal.
Also in you case your geometry seems to be messed up, there are likely zero sized faces on the sides, overlapping edges, and probably two opposing faces on top and bottom. Try cleaning up your mesh by removing extra faces and duplicate geometry and removing doubles with W > Remove doubles and try using knife again after that.