A lot of the answers you’ve received so far are top notch and great suggestions. As well as decreasing ROM, you can try doing isometric work. Take the movement out of it. Try wall sits instead of squats or have her hold a sumo squat position. You can do the same with the lunge position. Once she can hold these positions isometrically, she can move on to movement. This can also be a great time to cue the group on how to work within their own ROM and within their own ability rather than singling her out.
I hope one of these suggestions everyone has offered works for you.
I remember a heated debate over a video posted on the ACE website
http://www.acefitness.org/article/2555/ discussing the proper mechanics of performing a forward lunge.
Aside from performing the lunge with a smaller ROM, your client can perform an assisted lunge by holding onto the wall or a body bar for balance to focus on correct form.
I’ve elevated the front foot on a step with a client once that seemed to help her.
If lunges are still tweaking her knee than there are several other exercises that will strengthen her lower body that she can perform while the others are doing lunges.
I have also found that explaining the lunge from another perspective made a difference with one of my clients in a group x class that had the same complaint. Rather than concentrating her focus on her leg movements and placement AS much, I told her to really think about dropping her torso evenly and in a straight line, down. The movement can be small, but if she concentrates on maintaining good posture and dropping her weight down the middle, it may take the focus on her legs & joints off. Hope this helps!