Help with punctuation?

[glendalough]

I always have trouble with quotes and punctuation. I don't know why I can't just breeze through it by now:

A young boy named Matty Frazier comes from an abusive home. A Knight In Glendalough of Aerleah begins with Matty being jolted awake in a cave with a horrible, stinky woman leaning over him and shaking a fistful of rocks and raining dirt and dust upon him. She announces that he is "A Knight!" Then she scurries away into the darkness.

Is it "A Knight!" or "A Knight"! No, that can't be right. I must have it right. Right?

[glendalough]

Oh, and I need to lose an and there.

[Roger J Carlson]

Most manuals of style will say the puncutation always goes inside the quote. I can't bring myself to do that when I'm using quotes "for emphasis". However, in this case, the punctuation belongs inside the quote because the exclamation is in what the old woman is saying rather than what the narrator is saying.

Another way to write this would be:
She said, "He's a Knight!"
or even:
"He's a Knight!" she announces, then scurries away into the darkness.

[glendalough]

Oooh, so that last way you wrote it, I could go with that. That is much more my style but then the punctuation scares me..