This morning was my W2R1, however I've had a dull ache in my knee for the last couple of days...
It isn't pain as such, and not really when I walk on it, its more when I start to move after sitting, it feels stiff.
Do you think I should rest it for a few days (my next run should be Wednesday morning).
My next question assumes that I need to rest it, should I start the program where I left off or repeat W1?
Feel a bit if a failure needing to rest this early on...
I'll be watching this with interest as coincidently I did W2, R2 this morning and I had the same pain in my knees. I was ok with the warm up walk but then noticed the ache as I set off to run. I am assuming it's now my legs getting used to moving and rebelling against me 
I've had this and can only say what worked for me. I taped my knees with kinesio tape after watching a video on you tube 
I shortened my stride and ran slower and tried to run on softer surfaces. It took a while but has now settled and the pain has gone. I still ran through it. As I say this might not work for everyone.
It's not unusual to have some sore muscles when you first start to make new demands of your body. Of course it's impossible to give any guarantees, but for most folks the sorness dissapears after having been ignored for a while.
I don't think there's any need to add in extra recovery, as long as it doesn't progress from "a bit stiff" to "a sharp pain" (but I'm no doctor, so don't take this as medical advice).
I'm no doctor either, but the basic rule that's been drummed into me is pretty simple: ACHE - OK. HURT - NO. If you hurt then you need either to take more rest or get some professional advice. I ached today after running on Saturday but after my run today I feel better if anything: but I ached, I didn't hurt! C25K is a personal journey so listen to your body - noone says you must do it in 9 weeks (actually I took nearly 7 months in the end). If you do take an extended break then if it's not too long try W2R1 again and only go back to W1 if you need to.
Judging by the position of the discomfort, I think it's bursitis. (I have most of the 'risk factors' - being overweight, using my knee more than I usually do, and a tendency for my knees to turn inwards). Advice is to use ice, painkillers and rest.
And if it's not bursitis?
Bursitis is usually very painful, often with visible inflammation. But not always.
The exact same thing can be said of a number of other ailments, some of which need different treatment.
If you suspect bursitis, I'd recommend seeking a doctor's opinion as soon as possible, as it can become a chronic and painful condition if not treated right.
But I wonder why you think bursitis? Is that what Dr Google said or is it based on sound medical reasoning?
Yes, I did google it, BUT I do have some medical background, and the pain (as it is now) is in the exact same spot as described online.
I will go to the doctors if it is not better after a few days of rest and antiinflammatories, but to be honest they will probably tell me to rest it and take painkillers which I'm doing anyway - so why waste my time and theirs?
Hot sweaty run this morning 
Awful run this morning.
Bad run this morning. 
After Week5 run 3 I have this knee pain when extended straight, is this ok ?
