The knob on the rear is velocity adjustment. This will affect how many feet per second your paintballs go. As far as this other knob you speak of, I am wondering if it is the air resevoir, or an air control valve. Can you be more specific as to the location? And how does your tank currently mount to the gun? Underneath the trigger frame or vertically in front of the trigger assembly?
As far as chopping balls go, several factors could be the culprit. Check your velocity adjuster, if it is set too high, the pressure alone could break a paintball. Plus, spyders are notorious for spiking in FPS (feet per second), and you might even be getting liquid co2 shooting through the gun that will freeze and break the paintball. A sign of this would be liquid, mist, or a smoke cloud (more smoke than normal that is) shooting out the end of the barrel when you shoot. If you have access to a chronograph, it would help in finding out if high velocity is a factor.
Paint is also a big reason for busting balls. Stay away from any brass eagle paint. Brass eagle busts in any gun. If you are not using crappy paint, then your barrel bore size may be too small for the paint. A way to check this is taking off your barrel and grab about five or so paintballs. Insert a ball into the feed end of the barrel, you want the fit to be snug, not too restrictive, yet not loose to where the ball rolls right through. Try to blow the ball through the end of the barrel, if you can't even budge it, then I would say the bore is too tight. I said to take 5 balls so you can check each one and get an average size of what in your paint bag (they will differ).
Do you know what exact spyder you have? If you let me know I will post a link for you of the diagram.
Also I will leave this post here for a few until you see it, then it will be moved into the Tech thread.