OP: Whether it's walking, sitting, standing, lying down, bending etc. Does this imply simply awareness of body sensations (since the sutta is titled kaya which translates as body)?
This is to be mindful of the sensations when doing these activities as sensations lead to craving, unwholesome roots, perception and thoughts which can be subjected to corruption....
By trying to be mindful of it you feel as if its a task and then just drop it and go with the lust .Your lust here is possessive of you ,its more fun for you than meditation ,meditation has become a routine not a way of being .You want to have choice & freedom .
First step is not to fight it .Its the attitude you have towards lust that you meditate upon ...
as they recollect and think about that teaching.
So tathā vūpakaṭṭho viharanto taṃ dhammaṃ anussarati anuvitakketi.
At such a time, a mendicant has activated the awakening factor of
Yasmiṃ samaye satisambojjhaṅgo tasmiṃ samaye bhikkhuno āraddho hoti;
Mindfully they take up & dwell in right view: that’...