It was Walsh's first game in Indiana since stepping down as Pacers CEO last month, then replacing Thomas as president of the Knicks.
Dunleavy scored 36 points for the fifth time this season, and the third against the Knicks. He averaged 31 points this season against New York.
Danny Granger scored 26 points, just missing his fourth consecutive 30-point game. Troy Murphy added 19 points and 12 rebounds as Indiana reached a season-high point total.
Indiana's Jermaine O'Neal got his first start since Jan. 16, when he left a game with a bone bruise on his left knee. He missed 33 games, then played about 20 minutes a game as a reserve before Wednesday. He played the entire first quarter, and finished with four points and five rebounds before sitting out the rest of the game.
Jamal Crawford scored all of his 25 points in the first half for New York before sitting out the second half. Zach Randolph had 23 points and 15 rebounds and former Pacer Fred Jones added 20 points for the Knicks.
Earlier in the day, Pacers co-owner Herb Simon announced he'd become more hands-on in operating the franchise, naming himself chairman and CEO of Pacers Sports and Entertainment.
