Do you exercise or rest a hurt knee?

Some 1 special, by your words this sounds like a patella tracking problem. In this case I would advise that you try these movements to gain better control of the muscle that helps keep the patella, kneecap, moving correctly. The first one is easy and all that is required is a bath towel that has been folded into 3rds and then rolled up. Place rubber bands on each end. Now ume a long sitting position on the floor and place the towel roll under your uninjured knee. Now have the muscles of that leg push down into the towel roll as hard as they can for 30 seconds and then rest for 15 seconds. Repeat that twice more with that leg and then switch the towel roll to the opposite leg and perform the same movements on that leg 3 times. This should be done multiple times throughout the day always starting with the uninjured leg first. Next stand up and do this movement. Hold the injured leg out straight from the hip while keeping the knee absolutely straight. The heel of that leg should be about 6" off the floor. Now slowly lower yourself as if doing a squat. Keep lowering yourself until the straight legs heel touches the floor. Go back to the starting position and continue doing that until you have performed between 10 and 15 reps. Rest for 1 minute and then do another set. Again rest for 1 minute and then do a last set. Now switch legs and perform this movement with the injured as the one you are standing on. Do the movement 3 times on that leg. This can also be done using stairs instead of standing on the one leg if that either scares you or you are just uncomfortable doing it this way. Stand sideways next to the bottom step. Place your uninjured leg on the bottom step running the same way as the step. Now simply stand up using only the uninjured leg until it is fully straight. Slowly lower the injured leg back to the floor. Do this 10 to 15 times and then rest for 1 minute. Repeat that sequence twice more and then switch legs. Do this movement at least twice a day and you should see a definite improvement in the strength and pain levels of the knee. Now if you have pain in both knees you are going to find that 1 knee is slightly better than the other so use that knee as the uninjured one. If you have access to a gym that has resistance machines you can also work the knees out using those machines. What you are going to do there is to start with the uninjured knee. The 1st set is done with a light weight and you do 15 reps. Rest 1 minute and then using a heavier weight that is not too challenging. Do 10 to 15 reps then rest 1 minute. On the last set you either increase the weight factor again to one that is challenging but you are still able to do at least 10 or stay with the last weight done. After doing the last set change legs and go through the same routine with the injured leg. By the last set there should be an increase in your strength. Do this routine and within a few days the knees will be reduced in pain and functionally you will be better.