Heck, this one can be answered directly from the FAQ:

(3.16) Direct Interaction

Immunity only extends to effects: It does not apply to the other elements of an event card or character ability, including costs and play restrictions.

Pretty clear there that you can still pay the costs with an immune character. 

In this particular situation, you would kneel Joff for the cost, but he would ignore the effects and not enter the challenge. But, since the goal is simply to kneel him, that works out pretty well.

Good catch, Flintacs. Clever.

Thank you one more time, ktom :)

Lets go one step more, Could you Attack, Your opp kneels to defend you then stand Joff and use the bone to try and include him in the attack again?

No. I'm not sure if it has been "codified" anywhere, but the rule came out related to the CS-Greatjon Umber that a character can only participate in a challenge once. This rule does represent a play restriction on initiation of any effect that would try to make it participate again (kind of like if the first save is successful, you are not allowed to save the character a second time from the same death).