is it worth potentially permanently damaging your body?

if it is then tough it out. only you can answer that questions.

for me it's a no brainer. i'd be like see ya crossfit, but that's just because i want to be able to move around and do stuff when i'm old and gray

I love CrossFit and I think it's worth sticking with. However, “The point of CF is to get better at life. Being unable to workout tomorrow because you were pigheaded today is not in line with our goals.” Garddawg - 22 March 2009.

I would recommend you constantly scale/modify the WODs. A good coach should be able to help you effectively with this. If your coach in your particular box can't or won't, I'd find another box. A friend of mine has had arm issues for 4 months now. He's scaled the workouts and is now getting to the point when he can start the normal WOD. Maybe you'll be in the same position 4 months from now.

I hope this helps.

This is the pefect answer !!! (*Good Luck*)

Scale the WODs, of course -- though not being able to run will make many days difficult.
You were not clear in your post: Are your knee issues and squatting issue permanent? Or are they the kind of things that, if you take it easy on them, and work to rehab them, will get better?
I ask because some people have physical limitations they think are permanent, but, once they work on them, they find those limitations improve.

There is nothing wrong with modifying a WOD. There are people @ my box that cannot run, they row instead. If it is a good box with good trainers, they should be thinking thinking of how you can modify each time you step into that box. I love CrossFit and there are times that I cannot do the WOD at all. It was Thrusters and Burpees and my wrist was giving me huge problems so he had me do deadlifts and box jumps instead. If you love CF, continue to go, just be open with your limitations.

I Love CF but due to running my knee is stuffed and also my doc has told me I should not squat.

Did he tell you not to stand up out of your chair at the dinner table? That is a squat. I say this not to be a smart *kitten* or to be dismissive of medical advice. We all squat in some form whether it is catching a heavy clean or getting in and out of a common chair. I would want my doctor to be more specific about how and why squatting is bad for you. Also, there is a huge self perpetuating myth that squatting, especially below parallel is bad for the knees. No one really knows where this myth originated but it just won't go away and there is no solid evidence to back it up. Even those in the medical community keep spreading this around. A second opinion is always a good idea. If it is true that you cannot squat, there are other ways to strength and activate the hips, hamstrings, glutes, etc.

As a CrossFit coach, we deal with people with injuries every day. In fact, it is rare to find an athlete that does not have mobility issues. We get a ton of endurance athletes in our gym that are broken from overuse injuries from their sport and over time, most (but not all) of them heal to some degree or completely. We find scaling options for all of them and over time, the athletes get to know their bodies well enough to properly scale themselves. For those that don't have mobility issues, the WODs are usually tough enough as written that most will have to scale something. Everyone wants to do WODs at "Rx" and many feel frustrated when they can't do the WOD as written. I have seen so many athletes ruin their experience by obsessing about doing exactly what was written on the board. But that is totally normal. CrossFit attracts driven type A people that take their duties and interests very seriously and they place a lot of their self worth on their ability to do those tasks well.

If you love CrossFit, stay with it. We are not trying to break you. Listen to your body. CrossFit should put you in a place of discomfort and unpleasantness but not outright pain. It is not worth permanent or lasting injury and pain but if you are doing it right (and that does not mean doing what is written on the board), you should get stronger and healthier.

The way I look at it is this, if you honestly see health and fitness as a non-negotiable part of your everyday life then you have the rest of your life to do CF or anything else... if you really need a break, its not going anywhere. I have had times where I have put my 100% focus into CF and then put it on the back burner while I concentrate 100% on power-lifing. One of my great friends put both lifting and CF on the back-burner to try her hand at triathalon for 6 months (didn't really stick lol).

So your question was:
"Should I give to away and chalk it up to an awesome experience or suck it up and risk hurting myself more"
My answer is does it have to be either? Can't you take a planned recovery break from CF and concentrate on strength and rehab with a real plan to come back? Many really good CFers have an offseason where they do just that.