Worried parents --
Toddlers who walk on their knees just need more encouragement. Obviously from these replies, and other ones that I have heard, all babies develop at different rates.
The important thing about your story is that she CAN walk on her feet. It isn't that she doesn't know how or she can't. There are some things that some kids like more than others, and you can use little motivators to get her walking.
Take her to a park with children playing, and long as it isn't too crowded. Not only will she see other little ones like herself running around, but the surface is not fun for bare knees. You can take her down the slide, and if she likes it a lot to do it again, you can encourage her to walk around the other side for another go. Go to the other side and have her walk to you.
You can also take her shopping and let her/him pick out some shoes that are the favorite as an additional incentive. Just be patient and keep at it: they will all learn to give up the knees sometime because it's just not fast enough!