why doesnt black retake with his knight?
It doesn't matter! The outcome is the same 2 Bxc7#!
Whats funny is after the black queen recaptures the knight, even if the white queen were to capture the rook giving the king check after and then black blocks with either the queen or with the bishop, white still gets checkmate on the following move as well with Bxc7.
Not quite. If black blocks queen takes rook check on e7 with the queen or bishop, then black can play Ke8 on Bxc7+.