You can acquire players in a sign and trade, but I see you see that now. Part of the reason the Rockets let Parsons become a rFA now instead of 1 more year at cheap money was to make him a bargaining chip in a sign and trade for Melo, Kevin Love, Rajon Rondo Chris Bosh, Lebron James or for the Lakers 7th pick.I'm not totally sure with the CBA, but I don't think the Knicks could take players back in a sign and trade anyway.
Edit: I think I'm wrong about this; the FAQ isn't totally clear when it talks about a team "receiving" a player in a sign and trade; I originally thought it meant either side of the trade, but I believe they just refer to the team acquiring the signed player. So the Knicks would be ok, I think.
Green, Bass, 2 Nets first round picks wouldn't be enough for Melo IMO. The Knicks would want one of Avery Bradley/Jared Sullinger, Bass, Nets first round picks to start and I doubt Danny Ainge will trade all of his assets for Melo, Kevin Love, Rajon Rondo 3 some.