The ABS on my 2004 GMC Sierra are locking up and making a knocking sound?

The brake pedal has always been a little squishy and just recently almost whenever I come to a stop the ABS kicks in and I have the brake pedal almost to the floor. I checked the brake pads and there's plenty of pad left. Then when I build up some speed (usually over 25 MPH) there is a knocking sound that comes from the front brakes. And I can feel it on the brake pedal when it's making this sound. Someone told me it could need a new ABS sensor. Any ideas out there?