Hello, my name is Dr. Kara and I have over 20 years of experience as a veterinarian.
I am very sorry to hear that Milly has a "skip" in her step.
I assume that what we are talking about is a condition called patellar luxation. This condition allows the kneecap to slide out place rather then staying in the patellar groove. When that occurs the leg cannot bend or flex as it should and the dog becomes lame.
This condition is usually congenital, meaning the puppy is born with the genetics to develop the condition as they grow. It doesn't mean that the pup is affected as soon as they are born however, and in most cases it is a condition that we see develop as the bones, ligaments and tendons that form the knee joint grow and develop. Not all pups in a litter are affected. It can also occur secondary to trauma as well.
I highly recommend that you have Milly seen by an orthopedic specialist. They can evaluate her and tell you whether surgery is needed now or she could benefit from joint supplements such as glucosamine/chondroitins and omega 3 fatty acids or a supplement called Duralactin as well as pain medication. I do think that Milly is painful, but because this has been a life long problem for her she doesn't know any different, and being a stoic breed that enjoys her walks she tries not to complain.
If you'd like to read more about pateller luxations here is a link to an excellent article written by the American College of Veterinary Surgeons: http://www.acvs.org/AnimalOwners/HealthConditions/SmallAnimalTopics/MedialPatellarLuxations/
In mild cases some dogs learn to kick their rear leg and pop the knee cap back into place. Over time however because of the constant wear and rubbing of the knee cap moving in and out of place we see secondary arthritis forming. Whether she needs surgery or not now will depend upon how severely she is affected. In most cases the dog does need surgery at some point.
It is true that many Jack Russells do have this sort of gait but that is only true because many Jack Russells have a rear leg conformation that predisposes to a luxating patella.
Please let me know if you have any further questions.