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Dawkins, who had six 3-pointers, and Ryan Kelly hits 3s to start Duke's big run. As Michigan State (0-2) kept missing shots down low, Seth Curry hit another 3 for Duke and then the Blue Devils closed the run by making 6 of 6 attempts at the free throw line.
The Spartans kept Krzyzewski coaching to the final minute. They finally started hitting shots and forcing turnovers to close to 74-69 with 12.9 seconds left.
Curry had 20 points while Kelly added 14 for the Blue Devils, who were 10 of 21 from 3-point range.
Duke led 34-33 at the end of a sloppy first half.
"It's a special moment," Krzyzewski said of his family and former players being there. "At halftime I wasn't sure we were going to have this moment. We beat a really good team, and I'm glad now we can just move on and just develop our team."
Keith Appling had 22 points for Michigan State, and Brandon Wood added 15. The Spartans finished with 21 turnovers.
"I was in a no-win situation," Michigan State coach Tom Izzo said. "I was either going to be the guy who threw the ball to Henry Aaron for the record breaker of the guy who shot Bambi."
Krzyzewski moved to the top of the list in his 37th season, all but five at Duke. He also coached at West Point, his alma mater where Knight molded a point guard into a coach for the ages.
Knight won his 902 games in 42 seasons, six at Army, 29 at Indiana and seven at Texas Tech. Krzyzewski has four national championships while Knight has three.
Krzyzewski and Knight both led the United States to an Olympic gold medal, Knight in 1984 and Krzyzewski in 2008. Coach K will have a chance at a second gold when he leads the team of NBA players again in London next summer. Two members of that team -- Carmelo Anthony and Chris Paul- were at the game and both spent a moment with Krzyzewski outside the locker room.
"The crowd here was great. Everybody wants to play in Madison Square Garden," Izzo said. "The back hallway full of his former players, there's nothing greater than that. I certainly respect that."
Under Krzyzewski, Duke is 453-71 in nonconference games.
"I know I'm a very good coach and I get really good guys, and then it's up to us to fight like hell to win," Krzyzewski said.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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