First of all, I totally love your drawing.
It's actually completely feasible to have a species that has wings and arms merged. There are definitely a few things to consider, though. When you say that their wings and arms are merged, I'm assuming you're implying that the arms are functional and can be used like normal limbs.
Pretty much any animal with wings does technically have a limb with the wing part attached to it, but the arm isn't very functional. This is because it needs to stay thin, aerodynamic, lightweight, and isn't used as an arm. Having a functional arm would make flight extremely difficult.
So, consider these details about the species:
The arm is a fair bit weaker as a sacrifice for weight
The body is smaller and/or the wing and arm are much longer and bigger so as to account for the size of the body
Flight cannot be sustained for large amounts of time
Now, onto another detail you asked about. Having the species walk around on their knuckles is also feasible, although, and this is just my opinion, this would be a bit more awkward and different than what's normal. Their bodies would be closer to that of an animal in terms of limb function, and thus may even have paws, and thus, it would completely negate the fact that they have wings.
So, instead, consider this:
The species walks on two legs, but because they live in difficult terrain with jagged and jarred, varying heights, and as a result, their fists are born calloused and able to withstand having all of the species' body weight on it for extended periods of time in order to navigate the terrain.
From an evolution standpoint, having the environment of their old home as a height-differing terrain, a tall forest would make sense, can explain the need for wings. Say their food grows super high on trees, so their wings evolved in order to reach the food and to hunt more effectively like birds do.