Painful snapping along the outside of the knee is not uncommon. Finding out what is causing it may be difficult. Some possible things to consider include iliotibial band syndrome, lateral meniscus tear, or snapping biceps femoris tendon. Other causes also include osteoarthritis (unlikely in a 16-year-old), joint instability, and snapping popliteus tendon.
The diagnosis requires a careful history and physical exam. X-rays, MRIs, and other imaging studies may be done but don't always show anything to help diagnose the problem. There are a few hands-on clinical tests the orthopedic surgeon can perform.
But many times, the diagnosis is made by trying different treatment techniques and seeing what works. Nonsteroidal anti-inflammatory medications are often the first line of treatment. Likewise, the physical therapist can try a variety of interventions. These may include ultrasound, manual therapy, taping, icing, and immobilization with a splint.
If nothing helps and long-term pain relief isn't possible, then exploratory surgery may be the next step. The surgeon can use an arthroscope to look inside the joint first. This may help avoid an invasive, open-incision operation. But if everything looks normal (as it often does in a young child), then a more complete surgical procedure may be needed.
Once the surgeon identifies the abnormal structure, steps can be taken to alter the cause of the problem. This could be to shave off a bump on the bone or to remove and reattach a tendon that may be snapping over the bone.
Many athletes are helped by conservative (nonoperative) care. Before waiting much longer, have your daughter evaluated by an orthopedic surgeon. She may be only a few weeks away from a successful solution.