The White Book agenda states "Each time you lose a challenge as the attacker, kneel a standing Kingsguard character you control or discard 1 power from your House."

How exactly does this work:

1) I kneel a Kingsguard character, if able; otherwise I discard a power from my house,

2) I can choose to discard a power from my house instead of kneeling a Kingsguard character, even if I have 0 power on my house,

3) I get to choose which option I want, such as kneeling a character to save my power, or discarding a power to keep a character from kneeling.

Thanks.

You must do one or the other successfully.

That means that if both options are open to you (i.e., you have a standing Kingsguard character and power on your House), you may choose which penalty is applied.

If only one option is open to you (i.e., all your Kingsguard characters are kneeling but you have power on your House or you have standing Kingsguard character but no power on your House), you must take the option that is left to you. You can't say "I choose to kneel the kneeling Kingsguard character" - which would result in an unsuccessful resolution - because you have another option in resolving the effect (discarding the power) that will be successful.

If neither option is open to you (i.e., all your Kingsguard characters are kneeling and you have no power on your House), the effect will fizzle completely.