This interesting and miserable condition is common in runners and cyclists as well as in non athletes. It is caused by a tight band of tissue rubbing on the outside of the knee. It can be made worse by running on the track, always going the same way, or running on cambered roads, always on the same side or by poor running shoe choice. In cyclists bike setup and cleat position is often to blame.
Recovery depends on stretching the tight iliotibial band so it is not so tight, and strengthening the area that rubs. Relative rest, and avoiding the specific causes is also necessary.
Strengthening the area can be achieved by a rather odd looking exercise which actually provoke the rubbing in a controlled manner called the Walt Reynolds regimen. This requires you to stand on the affected leg only, with the knee slightly bent and your body leaning toward the other side (so that your weight is centered over the bad knee). You then need to rock your pelvis back and forward about 20cm. If you are doing it right then you should reproduce your usual pain to some extent.
There is a great description of this here: Walt Reynolds ITB exercises
Charles has suffered with this in the run up to a marathon in 2007 and get fully recovered by using these exercises.
If these don't work for you then the next step is shockwave therapy.