Did John F. Kennedy know about his judicial nominee's racism?

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Yes. The perception in the Kennedy administration is that there was no alternative but to appoint pro-segregationist anti-civil rights district judges to most southern districts. Both Senators from the state in which a judge would serve must approve of the appointment before the full Senate even considers the appointment. Inevitably, then, district judges reflected the prejudices of their states. The joke was that:

while under the Constitution, the president appointed judges with the advice and consent of the Senate [in reality] southern senators appointed them with the advice and consent of the President.

That said, Harold Cox was especially notorious, even among other southern judges of his age. One story is that Kennedy appointed Cox in return for the confirmation of Thurgood Marshall:

Kennedy had named Thurgood Marshall to the Second Circuit in 1961. [He was] perhaps the most distinguished black member of the bar in the nation . . . Senator Eastland, chairman of the Judiciary Committee, held up his appointment for a year. One story had it that Eastland spotted Robert Kennedy in a corridor of the Capitol and said, "Tell your brother that if he will give me Harold Cox I will give him the n*****."

In short, Cox was a known quantity, but Constitutional division of powers meant that judges often resembled the communities they represented. In general, this is a good thing. In instances, it can be ugly.

Source: Promises Kept: John F. Kennedy's New Frontier, by Irving Bernstein, pp. 70-71.

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