Knuth neither confirms nor outright denies the story, but says "I've only met [Jobs] a couple of times and in each case I was impressed by him probably more than he was impressed by me".
I was actually present for this. My recollection was that Don Knuth's
response was more along the lines of "I seriously doubt that". (It was
still quite amusing though!)
Don Knuth's original objective for TeX was to allow anyone to create typeset documents. Currently, very few mainsteam typeset documents are created by TeX.
If Knuth paid more attention to the non-algorithmic side of software design - for example, accepting usability issues as bugs as those of us outside academia do - he may have been much more successful at achieving his aim.
So perhaps Jobs had something to teach Knuth.
Edit: I know you love Knuth, I do too. Downvoting anything that suggests he falls short in any way won't make his or your life better.
Knuth neither confirms nor outright denies the story, but says "I've only met [Jobs] a couple of times and in each case I was impressed by him probably more than he was impressed by me".