In a recent game I had a lady trying to stab a PK with a dagger. The knight unwilling to grab his sword and to hit her, wanted to disarm the lady.

I played it out as a brawl vs dagger roll. As the PK rolled a critical on his brawl I ruled that he took the dagger away from the lady. So I had not need to think what otherwise would happen.

Has anyone dealt with this before and how would you deal with it?

I would have done the same, a DEX/brawl check opposed to a dagger check for the NPC. Critical success: disarms the opponent and grabs the weapon, success: disarms the opponent, etc...

Since during a disarm attempt with bare hands, you are actually deliberately getting close to the weapon and placing yourself in danger, I'd do it using a variation of the full defence v out of control attack. The attacker attacks first unopposed +10 (maybe just +5), and then the defender tries to capture the weapon with no bonus to defense. I feel its a fair exchange for a disarm. Especially for knights not normally used to it.