Iliotibial (IT) Band Syndrome: This condition is characterized by inflammation of the iliotibial band, a ligament that runs down the outside of the thigh from the hip to the knee. The symptoms of IT band syndrome include pain and swelling on the lateral side of the knee, especially above the patella, and are exacerbated by activities that involve repetitive knee flexion, such as running or cycling. The location and nature of the pain, along with the limitation of flexion, make IT band syndrome a strong candidate for the single most likely diagnosis.

Lateral Meniscal Tear: A tear in the lateral meniscus, which is the cartilage structure in the knee joint, can cause pain and swelling on the lateral side of the knee. Activities that involve twisting or bending can exacerbate the pain, and there may be a limitation in knee flexion due to pain or mechanical obstruction.
Lateral Collateral Ligament (LCL) Sprain: An injury to the LCL, which connects the femur to the fibula on the outside of the knee, can lead to pain, swelling, and instability on the lateral side of the knee. The pain can be exacerbated by varus stress (a force that bends the knee outward) and may limit knee flexion.
Bursitis (Prepatellar or Suprapatellar): Inflammation of the bursae around the patella can cause swelling and pain above the patella. While bursitis typically presents anteriorly, it can sometimes be felt laterally if the bursa involved is the suprapatellar bursa, which is located above the patella and can extend laterally.

Septic Arthritis: Although less common, septic arthritis is a medical emergency that requires prompt diagnosis and treatment. It presents with severe pain, swelling, redness, and warmth of the joint, and can lead to significant morbidity if not addressed promptly.
Osteonecrosis (Avascular Necrosis): This condition involves the death of bone tissue due to a lack of blood supply. It can cause pain and swelling in the affected area and may lead to collapse of the bone if not treated.
Tumor (Benign or Malignant): Although rare, tumors around the knee can cause localized pain, swelling, and limitation of movement. It's crucial to consider this possibility, especially if the symptoms are persistent or worsening over time.

Pigmented Villonodular Synovitis (PVNS): A rare condition characterized by the growth of excess tissue in the synovium, leading to swelling, pain, and stiffness in the affected joint.
Synovial Chondromatosis: A rare condition where cartilage grows in the synovium, leading to joint pain, swelling, and limited mobility.
Gout or Pseudogout: Although more commonly associated with the big toe, these conditions can affect any joint, including the knee, causing acute, severe pain and swelling.