Sometimes these Chinese sights simply will not come apart without damage, better to leave them be if they don't want to co-operate.
It could be that the locking washer with the "D" shaped hole inside the windage knob has rotated past the flat on the elevation pinion shaft and is jammed. Not a good situation, as the elevation pinion may have to be driven out, which will destroy the threads in the process.
This washer is a sloppy fit on the pinion shaft which sometimes can allow it to turn on the shaft and engage the threads. How badly do you want to remove the sight? If you are just doing it for maintenance, I would suggest just screwing it back together and use it as is. If you must have it off, keep unscrewing the windage knob screw until it pops out. This may take some force, as the retaining ring has to be pulled out of it's groove. Once it is out, drive the elevation pinion out of the windage knob, which will flatten the threads making it unusable.
Perhaps someone else here has found a way to get the washer realigned with the flat on the pinion shaft once it has spun, but I could not. It might be possible to hold the elevation knob and turn the washer with a pick or a fabricated tool as it has a groove on the outside, but at this point I had already decided to junk my sight if it was going to be this much trouble to dismantle.
Some Norinco rear sights are just crap and will have to be replaced, as I, and many others here have discovered.
sometimes they actually work well! 
