It sounds like it may just be arthritis. I would consider rechecking x-rays at some point. My main concern in that area would be osteosarcoma. This is the most common bone tumor that we see in dogs. We typically see bony changes on the x-rays. If the swelling has worsened, then I would recheck the x-rays just to make sure. If there is a bone tumor, the leg will need to be amputated. If it's not a bone tumor, then I would treat assuming arthritis.
Here is some info on bone tumors in dogs:
If it's arthritis, there is no real cure for this, but it can be managed a lot of ways:
1. Keep him at an ideal body weight, overweight dogs are much worse
2. Anti-inflammatory meds- Rimadyl, Deramaxx, Metacam
3. Other pain meds- Gabapentin, Tramadol, Amantadine
4. Joint supplements- Glucosamine, Chondroitin
5. Using a diet J/D (joint diet) can actually supply glucosamine, chondroitin and essential fatty acids without having to supplement. You would get this from your vet.
6. Low impact exercise- swimming, slow walks, stretching
You do not need to do all of the above, but a good combination of what works is the best way to manage chronic arthritis in dogs.
I hope this helps, let me know if you have any other questions.