I'd say, avoid deep squats because of knee issues. Some gyms have a machine that allows you to do seated leg presses or seated leg lifts, and for me those are better. But it sounds like you are at home.
One of the best leg exercises is just getting up and down from a chair without using your hands. The chair should be fairly high--not a soft, low one. It's sometimes easier to start from a bed, if your bed is higher than a chair. (You want to avoid a deep bend.)
Crunches and situps aren't necessary. You might consider the "Crunchless Abs" DVD--but some of the exercises on that video might be too much for you. However, you can always skip them until you build up a bit.
Kettlebells can be used for a variety of workouts, including seated. I prefer plain ol' dumbells myself. An 8 pound or 10 pound set would be good to start, BUT, if you have no history of working with weights, then start with lower weights, like 5 pounds. Again, you'll want to work up. You can also look into resistance bands, which are like big rubber bands in different levels of resistance.
Strong muscle helps burn fat more efficiently, so weight/resistance training is a GOOD thing to add! Using weights also helps prevent loss of muscle mass while losing fat.