That would be "Si, lo conosco". Conoscere and sapere both mean "to know". Sapere is used for knowing facts and information, and to know how to do something. Conoscere is used to know people, places, famous people, works of art, songs, etc.
There is a good explanation and follow-up here: http://my.lifeinitaly.com/threads/5171-conoscere-vs-sapere
That's what I thought. For example http://italian.about.com/library/fare/blfare116a.htm gives 'lo' as direct object pronoun for both him and it.
No. Sapere can be replaced by "to possess an information saying" while conoscere means "to be familiar with". The sentence "I possess the information saying him" makes no sense. Compare it with "I possess the information saying it." On the other hand "lo conosco" could mean both him and it.
Because Italian has two verbs that convey the meaning of that "to know" has in English.
The verb "sapere" (io so, tu sai, ecc.) is for knowledge of facts or how to do something, while the verb "conoscere" (io conosco, tu conosci, ecc.) is for familiarity with a person. "Lo conosco" would be better for saying "I know him."