First: Congratulations on your desire to start working out. If you can stick with a program for a month or two you'll find your life improves dramatically as a result. That first month or two can be rough and you might wonder why you're doing it. I recommend surrounding yourself with as much reminders of your motivation as you can.
Do Strength Training three times a week. http://stronglifts.com/
is a free website with programming. http://startingstrength.com/
is also a great resource - arguably the bible of strength training. There are others but those are some of the best. If you do that, with a good diet, you will
lose weight and get stronger. Ideally, the strength gains will make the injuries to your knee minimize as the muscles and tendons around it strengthen. You will lose weight much, much faster than you could with cardio alone. And you'll only spend about 3 hours a week training. Seriously.
If you can't get into a gym or get your hands on a barbell there are some great bodyweight programs out there that can progress you from super basic starting moves (can't even do a pushup? there are programs that can help) to being able to do gymnast level stuff. I can't advocate any of them as I haven't used any. I'm planning on doing http://www.kinobody.com/1756/bodyweight-training/
once a week. His site offers a nice progression for most of the exercises listed, but even the starting ones may be too advanced.
If you add cardio do some HIIT for 15-20 minutes followed by steady state for up to a maximum combined total of 45 minutes. Do it after your strength training so you have true rest days, and don't do it for several weeks until your nervous system has had time to adjust to the new strength training moves.
When you do start doing cardio I recommend the elliptical. My knees give me pain and I've found that strength training makes the knee pain get better over time and the elliptical doesn't aggravate it.
For diet I strongly advocate fasting. http://www.Leangains.com
has a 14-16 hour a day protocol and Eat-Stop-Eat
has a 24 hour 1x week protocol. I combine them. I went from 260lbs to 170lbs using these resources, and I'm healthier than ever. Honestly you could lose weight with diet alone, but if you fast you really should do some resistance training - even if it's a good body weight routine.
Bonus: Intense strength training and intense HIIT have both been proven to be as effective as antidepressants and I've been able to drop mine thanks to these exercises.
Don't start with p90x or insanity. Both are good programs, but overwhelming to a beginner. If you can't make it through their testing routines (youtube has them, I believe) you may injure yourself using those programs. And they both have a lot of jumping. Very bad for bad knees. Although the yogaX that's been mentioned would probably be fine, and coupled with a good diet will probably help you lose weight.