It sounds like your Layla has luxating patellas where the kneecap slips in and out on its own. You mention that it is worse than it is ever been so I assume that this is something that Layla has had for awhile. Luxating patellas themselves aren't painful, but over time they often get worse until the kneecap slips out of place and stays there. Also, the joint deteriorates over time and arthritis sets in. Arthritic changes in the joint cause most of the pain. If she doesn't respond to the medication, surgery is probably your only option.
Here is some information for you:
Luxating Patella: A Knee Problem in Dogs