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CHARLESTON, S.C. – The inevitable is unfolding in the sad saga that is Allan Houston’s comeback.

Houston was dealt a major setback when the Knicks shut him down yesterday after he practiced for less than a week. A medical retirement seems a matter of time.

Houston experienced pain in his left arthritic knee Monday and begged off doing drills. Yesterday, team doctor Lisa Callahan decided Houston needed to rest until at least next week. Houston isn’t sure he’ll play any of the seven-game preseason schedule that begins Saturday against the Nets.

Bubbly after the first two days of camp, Houston was downcast yesterday, more resigned to his fate than ever before.

“It comes up,” Houston said regarding thoughts he’ll never make it back. “The bottom line is however God wants this thing to work out, that’s how it’s going to work out. If it’s meant for me to do this, then God will make it happen. If not, he won’t, period.”

The Knicks’ decision to spare Houston from the amnesty waiver ax in August occurred only after revealing to Knick officials he won’t go through the same ordeal of the past two seasons, that he’d sooner retire.

After the Knicks announced they waived Jerome Williams instead, Houston said, “I communicated with the Knicks I plan on being back. But if I can’t get back to the level where I want to get back, I would consider retiring.”

Yesterday, Houston was asked if he’s willing to play through pain this season. “I’m not going to that,” Houston said. “But you’re getting too ahead of it. We’re not there yet about playing through pain.”

Houston hopes the latest discomfort is a result of not having a day off during Larry Brown’s nine-day training camp that ends today. However, Houston hasn’t scrimmaged or participated in each double-session.

“Going at this intensity is new,” Houston said. “I don’t think it’s realistic or fair to judge it off training camp. I didn’t have time to really recover. Once next week we come back, I’ll have a better, more realistic answer for you.”

If Houston retires, the Knicks financially would have won out by designating Williams for amnesty, saving on both contracts. In a medical retirement, the Knicks are liable for $16 million of Houston’s $40 million pact. Insurance pays him the rest.

Owner James Dolan, Houston’s golfing buddy, wanted to give him one last crack. “We agreed we’d give Allan the opportunity to try to come back and play as the player he was before,” Dolan said. “Giving him the opportunity is the right thing.”

Houston said he was pain-free the first four days. “[I’ll] keep being patient, keep pressing on and see what happens.”

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Larry Brown said the Knicks will vote on new captains after preseason, meaning incumbents Stephon Marbury and Houston could be stripped . . . Expected to be bought out, Antonio Davis is still in Chicago and won’t arrive for today’s camp finale. There’s no rush in releasing Davis. The new CBA has an odd new rule that prevents Davis from re-signing with the Bulls until Oct. 27.

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