I'd have to dig out the paperwork, but basically I tore 6cm of cartilage on my femur and my meniscus, so they did a scope and cut the tear in the cartilage and shaved the meniscus or something. The biggest problem I had was my injury lingered for about 5 months before I had surgery (took forever to get scheduled with the surgeon because the ortho guy wants to advise everyone without an ACL or MCL tear to see if it gets better knowing that most people are sedentary and won't actually need surgery because if he sent everyone straight to the surgeon it would take 3 years to accommodate everyone). In that time and in the immediate aftermath of the surgery, the innermost muscle on my quad drastically atrophied and my hip got very weak. I'm still rehabbing those. The knee sounds like there is gravel inside of it unless I warm it up for 15 minutes and do a foam roller on the quad for 5 minutes. It totally sucks, but I can do squats again and run at least enough to chase my son around.
Your knee issues could certainly cause hip problems down the road and had I realized how bad my hip was going to get, I would have absolutely gone for surgery way faster. Depending on the tear you have and what your arthritis has done, it can trigger some nerve in your quad to make your quad stop working so as to prevent further damage to your knee. That "failsafe" is what really messed me up. If you can't jog or do an actual squat without any weight, then you have that same nerve issue I had and I would get surgery and as much physical therapy as your insurance will cover ASAP. Just a minor tweak in your stride can really jack up a lot of the muscles in your leg and as your bones get weaker as you approach 60, if you have any stride or pushoff issues with that knee, I would absolutely get it fixed because even though it sucks now, my guess is if you hit 60 or 65 with atrophy in those muscles your golden years will be really, really bad. My hip was dropping a few inches on stairs when I pushed off with my right leg and if that happens when you get old, that's how you break a hip without a fall.