C 634 632 629 625 600 chars
#define F for(;i<4;i++){
#define B ;}break;
#define O x=X,y=Y,
P,X,Y,c,r,x,y,i=0, N[8][2]={{-2,1},{-1,2},{1,2},{2,1},{-2,-1},{-1,-2},{1,-2},{2,-1}},S[4][2]={{1,0},{0,1},{-1,0},{0,-1}},D[4][2]={{-1,1},{-1,-1},{1,1},{1,-1}};
C(){return((0<=c)&(c<8)&(0<r)&(r<9))?printf("%c%c%d ",P,c+'a',r):0;}
M(int*m){c=m[0]+x,r=m[1]+y;C()?x=c,y=r,M(m):0;}
main(int a,char**v){char*p=v[1];P=*p,X=p[1]-97,Y=p[2]-48; switch(P){case 75:F c=S[i][1]+X,r=S[i][0]+Y,C(),c=D[i][1]+X,r=D[i][0]+Y,C()B case 81:F O M(D[i]),O M(S[i])B case 78:for(;i<8;i++){c=N[i][1]+X,r=N[i][0]+Y,C()B case 66:F O M(D[i])B case 82:F O M(S[i])B}}
#define F for(;i<4;i++){
#define B ;}break;
#define O x=X,y=Y,
P,X,Y,c,r,x,y,i=0, N[8][2]={{-2,1},{-1,2},{1,2},{2,1},{-2,-1},{-1,-2},{1,-2},{2,-1}},S[4][2]={{1,0},{0,1},{-1,0},{0,-1}},D[4][2]={{-1,1},{-1,-1},{1,1},{1,-1}};
C(){return((0<=c)&(c<8)&(0<r)&(r<9))?printf("%c%c%d ",P,c+'a',r):0;}
M(int*m){c=m[0]+x,r=m[1]+y;C()?x=c,y=r,M(m):0;}
main(int a,char**v){char*p=v[1];P=*p,X=p[1]-97,Y=p[2]-48; switch(P){case 75:F c=S[i][1]+X,r=S[i][0]+Y,C(),c=D[i][1]+X,r=D[i][0]+Y,C()B case 81:F O M(D[i]),O M(S[i])B case 78:for(;i<8;i++){c=N[i][1]+X,r=N[i][0]+Y,C()B case 66:F O M(D[i])B case 82:F O M(S[i])B}}
Any suggestions on how to improve this? This is my first time submitting an answer.