Hi Michael,
I think in this case it is a degenerative OA knee with a significant effusion.
In this setting you see fluid in all of the knee joint recesses.
I would not suggest that the fluid deep to the ITB is due to a friction syndrome, I would be more in favour of it just being part of the global effusion.
When effusions get large they seem o pop out everywhere.
I would scan to see if there is any synovitis component by using Doppler to look for vascularity in the synovium that surrounds the fluid effusion. If we can see flow and suggest synovitis a catabolic intervention may help.
Steve