I had a lovely cat who never wanted to sit in a lap. She'd sit next to me - or my daughter, or my nephew, but never on the lap. That was her sign of approval, sitting next to me.
The kneading is a kitten behaviour that some cats have kept into adulthood, and it is a comfort and an affection clue. Yes, it can hurt.
If your cat is indoors only, you might consider carefully clipping the front claws back just a little bit. There are instructions how to do this without hurting the cat, you must avoid cutting into the vein or pink part of the claw.