don't understand how on the KLL you knit into the 2nd row down and the KRL you work the top stitch. If I do a KRL and then knit it, it is only one row down not two.
Because on the KLL, you've already knit the stitch on the row you're on, but for the KRL, you haven't knit that stitch yet.
As for the puffy look, is that on the sleeves or the body of the sweater?
I avoid sewing sleeves into armholes because it's a pain. I either do top down (or up) raglans, or yoked sweaters, or pick up and knit the sleeves from the armholes down. And picking up the stitches can have the same puffy problem if you don't get the stitch number right.