Did the Man in Black know he would lose his powers?

The Man in Black did not know that he would become mortal; he expected that he would be free from the island but retain his form and powers.

This is made plain by analyzing the scene with Jack and MiB (as Locke) just after they come out of the cave, following Desmond's extinguishing of the heart. Jack tackles Locke and punches him. Locke tastes blood, and the look on his face registers surprise. He then touches the blood and looks at his hand in shock. Jack then smiles, and, with the line that confirms that MiB didn't know, says, "Looks like you were wrong, too!" (and, of course, punches him a few more times).

Here's a screenshot from that scene:

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