Shellac is not a very durable finish for a floor.
It will have white spots the first time damp shoes walk across it, and wear badly in traffic areas.

Almost ANY finish is more durable than shellac (except plain wax).

Actually I may not be using the correct word (shellac). The company I am buying the wood from sells the stain as well and the stain is combined with a sealer whereby when you have scratches or worn spots you can just redo that area and not have to strip and redo. So what do you think is causing the whitish marks on the knots?

In my opinion, a product that has color and finish in one is a bad choice. If it is scratched or worn off the bare wood shows and is difficult or impossible to touch up properly. You would do better to apply a stain followed by a finish coat.

White in the knots is usually caused by the topcoat being applied before the stain is adequately dried. I don't know what would cause it in a tinted finish.

I now know the product that my brother used. It is a combination of Danish oil with 40% varnish. As far as the chalky finish on the knots, could this be because he did not condition first? I am hearing alot about the Waterlox product. Unfortunately I cannot find it in Quebec. Any suggestions as an alternative?