1. Bend your knees and bend your body at a 45 degree angle.

(Does this sentence mean 'bend your knee at 45 degree angle or not'?)

2. Bend your knees and bend your body at a 45-degree angle.
(Is this correct? There is a hyphen between 45 and degree.)

Neither sentence makes sense to me. I don't know how a person can bend his/her knees into a 45-degree angle AND THEN bend his/her body into a 45-degree angle. It sounds impossible to me!

Yes. the hyphen is needed. Didn't I give you this link before?
http://grammar.ccc.commnet.edu/grammar/marks/hyphen.htm
See "a" in the examples/explanation list.

1. The sentence "Bend your knees and bend your body at a 45-degree angle" means that you should bend both your knees and your body at a 45-degree angle. So, yes, it does mean to bend your knees at a 45-degree angle.

2. The sentence "Bend your knees and bend your body at a 45-degree angle" is correct with the hyphen placed between "45" and "degree." When expressing a compound adjective, like "45-degree angle," it is common to use a hyphen to connect the words together. This helps clarify that "45" and "degree" are being used together to describe the angle.