I can't tell you whether or not you have structural damage, although it is likely. However, that doesn't mean it's severe.
"Patellofemoral Pain Syndrome" is a VERY vague diagnosis. It doesn't tell you what is truly going on within the joint. To be honest, that is what most doctors will tell you if you have nonspecific pain underneath or directly surrounding your knee cap that can't be explained as anything else. On a tissue level, it gives you no detail as to where that pain is stemming from (i.e. ligament, cartilage, bone, muscle, tendon, etc.).
I do agree with the previous poster, you need to see a different doctor. It's not just "inflammation." You don't have a lot of the classic signs or symptom (redness, swelling, warmth, tenderness with palpation, etc).
Truly, PFPS is a type of overuse injury. It has a more chronic onset and one of the first signs/symptoms is a deep/dull ache underneath the knee cap which is malaligned and causing tracking issues. Many people do experience inflammation with this because the tissues underneath become inflamed from the patella rubbing differently during activities like running, walking, squatting, etc. It will even hurt after you sit for periods of time and then try to extend your knee and stand (so it's in a close-packed position and locked). The knee cannot properly extend (to 0 degrees) if your joint is not properly aligned.
Can you try to isolate movements which cause you pain?
- sitting to standing (esp after prolonged periods)
- standing to sitting
- knee extension with your hip flexed (you can do this by sitting upright in a chair and then extending your knee so your lower leg is straight)
- knee extension with your hip extended (you can do this by laying on your back with both your knees bent so your feet are flat on the floor, then extend the affected leg and straighten it to the floor)
- knee flexion with your hip flexed
- knee flexion with your hip extended
- squatting
- going up the stairs/down the stairs (may hurt during one but not the other, skip a few stairs if you have to to increase the effort on your knee joint)
The best thing you can do is find an orthopedic to evaluate you and not your normal physician. If your previous doc was an ortho, do some research and find a new one who specializes specifically in the knee and hip joints. They tend to go hand in hand with injuries. I would ask him/her to look at your Q-Angle (the angle between your rectus femoris and your patellar tendon). They will basically measure from your ASIS (a bony point on your hip) to the midpoint of your patella (the knee cap). It will give them better information on anything that may be predisposing you to pain. Also, your Q-Angle could be off on one hip and not the other if your hips are not properly aligned (which will cause random knee issues).