If you have medical papers on your knee injury, I guess you could either get out or get a nice posting (like some mentioned).
As far as nightmares.. I don't really have that much experience since I was in the naval defence and then in the coast guard as posting. It was just 8 weeks of basic training, and it was pretty ok..
I found that the only bad thing in the military for my part was constant cleaning.. Cleaning your room, cleaning your clothes, cleaning your gun, cleaning the common room, cleaning the bathrooms, cleaning, cleaning, cleaning...
(Uhm... Not really native English speaking.. Should that be washing instead of cleaning...?)
Apart from that it was pretty decent..