Patients with knew arthritis often experience inflammation (e.g. knee effusion). The involvement of inflammatory mediators can result in diffuse pain. Also patients with chronic knee arthritis may develop a Baker's cyst which is present in the popliteal region.

Don't forget about the popliteus muscle,  it may be indicated in patients with excessive pronation of foot. 

The popliteus muscle unlocks the fully extended knee by internally rotating the tibia. An excessively pronated foot causes the tibia to be in external rotation stressing the popliteus.

Also if the rotational mechanism of the foot and ankle are not correctly locking and unlocking the knee during gait this may cause a shear stress on the knee joint cartilage. 

There is some indication that altered biomechanics of the foot and ankle is involved in the neo genesis of knee osteoarthritis. This then may progress to osteoarthritis if the shear forces prevail over time. 

The correction of the foot and ankle biomechanics is a challenging business.

There are a few reasons I encountered 

1- effusion , and the baker cyst that is caused by effusion (this pain is posterior medial)

2- these patients walk semi flexed , while doing that a contracture develops in time that may cause some pain but most importantly biceps femoris tendon is overused and generally they have pain right over the tendon . Popliteus tendon may also be another reason 

3- in chronic cases posterior osteophyts may be another reason 

Thank you all.. stress on popliteus muscle being one of the cause was a new learning for me.. definitely a challenge to correct the foot and ankle biomechanics.. may be to an extent taping can help..  

The semi flexed leg walking may be to protect the knee cartilage. There is literature to support this. Consider that the condyles and epicondyles are a relative size and shape to cause rotation of the tibia against the femur when the knee locks and unlocks when it goes into and comes out of full extension during the gait cycle. 

So if this restricted because the ankle and foot is unable to accomodate this tibial rotation during the normal fair cycle translates into a shear force.

literature also suggests that bio mechanical stresses are a significant contributor to knee  osteoarthritis. 

In practice we see a lot of:

1 Popliteus muscle 

2 Posterior capsula (osteophytes) 

3 Gastrocnemius - Biceps femoris 

4 Increased mechanical stress because of altered kinematics (hip/pelvis- femur tibia- foot-ankle chain)

Could it be hydrops ?