It sounds to me like it could be one of two things.

1) If you're using the grub screw method to lock the gear assembly, it's possible that the grub screws aren't tight enough and the ring gear/torque ring is slipping. When it slips it makes a knocking or grinding noise, so try tightening up the grub screws (not really tight though) and see what happens.

2) I've been using some 12V Argos drills in a robot I'm building for someone and had problems with a couple of them where there was a loud knocking or grinding noise when they were turning. It felt quite rough as well, and when I opened them up, the three small metal gears (the set nearest the output shaft) weren't rotating on their pins, they were just loose inside the gearbox. I'm not sure whether the owner had opened them up and re-assembled them as such (shed some light here if you wish Tony ) or if they came like that from Argos (which would be a serious quality control issue!) but it might be worth dismantling the gearbox and making sure everything is rotating on pins or shafts. Once I sorted that, they ran fine. I've yet to check the other two and see if there is a similar problem, but if there is I'll let you know.

At the end of the day you get what you pay for with the Argos drills; they are the cheapest available and the lowest end of the range. Having said that, I would expect them to perform to standards similar to those of other generic drill motors which, in my opinion, should be at least several battles/a few events.