Thats exactly what the PT said and I think there may be some truth to it. several years ago, i had a hip problem that lasted for the 2 years. I babied the abductors because that was where I was feeling the pain. I finally saw the right doctor who said it was the IT band being too short. 3 weeks of stretching fixed everything. From everything that everyone has "unanimously said" i think th hip thing is correct. I've been working on that muscle for a few weeks now, but there is no change in knee pain. i figure ill give it a little time, im not giving up yet.
It most likely will be a hip problem/dysfunction. Unless it's an acute/impact injury (i.e. you fell on it), then it's deffinitly the hip. The hip has direct control over the knee joint. More so, the glutes have direct control, too. Glute Medius (the one that tested weak in abduction), attaches to the femur, where as glute maximus attaches to the shin (tibia), funnily enough it attaches to the shin via the ITBand. When the glutes don't function properly, your knees get punished for it. The hip flexors/quads cross both joints too and are often tight, or short, which causes the glutes to 'switch off' which causes the knee to get painfull.
In the same way that the knee joint is more a victim than a culprit, the same can be said for the ITband. It's a big belt of connective tissue and it's solid. As mentioned above it attaches to the top of the shin (the TFL and glute max sort of merge into it). A typical scenario is weakness in the glutes giving you compensation/overuse from the TFL which 'pulls' on the IT band which 'pulls' on the insertion on the shin which causes pain, which can be lateral OR anterior pain. Strengthening the glutes and stretching the TFL would be the solution to relieve pain... A lot more can be going on but that's it in the most basic sense. Note, i'm not trying to diagnose anything just trying to explain the relationship between the hips and the knees (and pain).
Did the Physical Therapist give you stretches or movements to do?
I would be interested to hear what you've been told to do about it and how you are trying to strengthen that muscle? The thing is if the muscle is inhibited by an antagonist (hip flexor ) then it won't matter how much you strengthen it if the antagonist isn't addressed, too, and, if you're trying to strengthen it with a short antagonist then you most likely aren't 'getting at it' with whatever you're doing. You'll probably be compensating in some way or another and not actually targetting it properly.
Also note that no matter what I or anyone was to say here, your PT is your best bet to resolve this. Everything sounds good so far though. Sometimes you can also do the right things but just not often enough (and this is really why i'm asking).