Getting older has its limitations. Sooner or later we all start falling apart or have diminished capacities. The knees don't last on many people which is a pity. Long ago I learned when teaching PE that impacts on hard surfaces made my knees sore. The solution was to avoid running or playing sport on hard surfaces and to wear sports shoes that have cushioning. That wasn't so easy in the old days because Adidas and other manufacturers didn't make them for cushioning. I never run on the street because of the hard surfaces and because going downhill is a killer for the knees. In the sixties even university PE people believed that full squats were bad for the knees. The study they based that idea on was flawed but people were doing half squats in those days. That was lunacy. I didn't see weight lifters with bad knees and they went low with huge weights. Jumping down off platforms at work can do damage. Squats actually help build up the knees. I always do full squats as deep as possible.
34 in waist at your height and weight is doing well. So, do you find you can build muscle or not?
To answer your question, yes I can build muscle and have. My arms tend to top out at 17 1/4" when I work them regularly. My quads are a lot less responsive than they once were to weight training although my legs are strong. I suspect the fact that I have short legs helps as opposed to the fact that I have long arms which poses a problem for me when doing bench presses. This is also why my biceps are hard to develop as opposed the my triceps which come along nicely.
I did very little exercise of the type you mention. I did do some running on hard surfaces when I was much younger, like in my 20's and 30's. I have also long been an avid bicyclist. Riding a bicycle is low impact though. The knee surgery I recently had was for a torn meniscus. I have no idea how or when I tore it. I just know it hurt like shit. To hopefully help me build new cushioning, the orthopedist preformed micro-fracture surgery while he was already in there. It was all arthroscopic surgery which is minimally invasive. I've been told that it takes up to a year to fully recover from micro-fracture surgery. It has only been about 8 weeks since the surgery. I was on crutches for nearly a month.
As do a lot of folks as they age, I have arthritis. It is in my knees and my spine mostly. I have a little bit in my hands. I've heard that resistance training is beneficial in staving off the effects of arthritis. Let's hope this is true, because weight training is my favorite form of exercise.