Squats should not bother your knees. I have a bum knee and I can squat without pain. Try squatting with your weight in your heels (lift your toes to check) and sit back like you're trying to sit in a chair that is behind you. Start shallow and work your way further.
Vivo barefoot has some great shoes, too. I would start slowly, though. If you're used to heeled shoes, going suddenly barefoot will challenge the achilles. Work up to barefoot slowly. And stretch and ice after every walk.
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