A student who is in their second year of kindergarten is able to learn sight words and is able to read them off of any list but cannot read the words in a sentence. What can be done to help the student make the connection and be able to read words in a sentence?
I would choose a couple sight words to introduce to them each week and build a lesson plan with them. So, they become familiar and when they recognize the word in a book or on paper they will be able to read it. You can have the students write them in different colors to make a rainbow, they can make little booklets, etc.
I like your resolve with having them play games in a group setting and creating their own sentences with the words. I believe students working with their classmates will help them understand a topic better and allows the students to help each other out if needed.