If I'm being quick about reading it I get lost after the first K.

This looks fun, but I too get lost between the k and ker. Also, you can do more of that thorny thing on some other letters.

What's the explanation behind the troll symbol? And is that a flame on his head?

Yes, it's a candle flame. The symbol is based on a Welsh legend - it's a tiny miner that would haunt/protect gold mines.

If it needs to read Tommyknocker I would suggest keeping the Tommy as if one word and making the second O show enough to not be confused with a C. The way it looks now I read Tom as a separate work and then I see MYNKC in a row.

Read it as Tom Myknclker

Tom MykncCker.

It's cool, but illegible. Have you tried using color to separate the Tommy from Knocker? That might be enough - if people read "Tommy" clearly, then "Knocker" might be more evident.

Maybe?

Is it really supposed to say Tommy Knocker? Damn that's bad. It looks fun though, but I would probably put the "Tommy" part all on the left side without the first M at the top, but instead lower, so that it would say "Tommy" diagonally. If done right, it will bring the Y more to the left so you have more room for "Knocker" so you won't have to do that horror with the "noc" part. Don't make "no" into one letter/symbol, don't cut the "o" in half, and don't make the "c" so big. That being said, I do need to compliment you on the style of the letters and the illustration. Nice work there.