actually that sitting on your knee stretch stretches the ligaments, when a ligament is stretched beyond .5% of its length it begins to tear.
its funny you ask this because I have the same problem, 50% of my workout drive is to strengthen my knees, this is what i've learned so far...
never do anything but barbell style squats... to hell with the smith machine and leg press, quad extension machines can hurt weak knees as well. only do barbell squats but be sure to have someone show you. squats can make or break your knees, doing them wrong will destroy an already weakend knee, but doing them right will make your knees strong.
in repsonce to this i do kettlebell front squats. here is how you learn to squat the right way. walk up to a wall, touch your toes to it. now try to squat all the way down to the ground without falling backwards. you'll have to try to "sit back" as opposed to down and your knees cant go anywhere.
the second favorite is dumbell lunges. do a set of 5 reps for each leg. strengthening the quad muscle will help hold the knees in place better.
third, hold ur balance against a wall, lift one leg up and on the other leg slowly lower yourself down. try to find the spot where your knee feels weak, now hold that position and tighten your entire body. feel all the tension you have created in your body and try to send it to that weak spot in the knee. feel your knee because more tense and "plug up" that weak link in the knee. do this 3 times a day thruought the day with both legs.