How should I let a professor know that I don't want to work for her?
It isn't much clear as to why Mr. K would insist you to work with Ms. E. It might be either of the following


It might most probably of Ms. E's suggestion/influence.
They might be on the same team (@virmaior's point)
Mr. K has just got another student he prefers over you. 


To figure out why and how to react bases on why, @demitau's suggestion would be most appropriate; speaking openly with Mr. K should provide a solution.  

If the answer to the last question is what you require (how to let Ms. E know I'd rather work with Mr. K?) then the most diplomatic approach is to say something like this: state that you feel much honoured to work with her. But it seems you current research interest are much inclined to that of Mr. K. Hence the decision.