I have no inside information, but I would think he absolutely was a Knight favorite. He was a quiet guy who gave it all on the court, never showboated, the Knight way. Knight was so effusive in praise the way he worked to come back from his back injury to help lead them to the B10 title in '80 even though he wasn't 100%. He was front and center last year at Knight's return so I think that speaks volumes.
One memory that sticks out for me was in '79 when they lost at home to Magic. Knight always said he didn't think they could have ever beaten that MSU team. They lost 3 times that year by double digits. Woodson gave everything he had and at one point in the game he was so frustrated, he was stomping his feet in frustration at Tolbert and/or Turner not blocking out Magic and crew swooping in for one handed rebound dunks. I think he might have fouled out but when he did come out near the end, Knight hugged him around the neck which was so out of character for Knight, but he appreciated how much Woody had left on the floor.