Ok, just my two cents on what triggered off the whole issue between the Knopflers - and based on the very little I know about it and bands in general.
It's easy to tell Mark is a genius and David isn't. I'm not saying David isn't talented, he is, but compared to Mark he's just a good musician. It was also pretty evident that DS was MK and MK was DS, from the get go. David then had two options, he could have either accepted it like John did or fought it and eventually drop out to seek a solo career, which is what he ended up doing.
Putting it this way it looks like a no-brainer to me. My brother is one of the best musicians the world has ever seen! I'll stick around and serve his music, leading a comfortable life, playing my guitar around the world - and if at some point I feel like doing my own little thing I'll just use some of all this money I've made, record a solo album, put on a tour of some sort and then back to DS for another album, another tour, stability and so on. Sounds perfect, but... we do not know what it was like for David to be in the band at that time. What we do know really well by now is that Mark was a bit of a tyrant back then and it's quite likely that he would bully his little brother around.
At this point, assuming all the above is true, David decides to take another path and the rest is history. Or maybe David just wasn't ready to take the passenger's seat and let Mark do all the driving. So many variables...
In the end I just hope they leave whatever happened behind and allow themselves to be brothers in a broader sense again.