Joined: Jan 2008
Posts: 23,642
Likes: 1,106
From: Mans of NC & SW UT Desert
Bikes: 86 Katakura Silk, 87 Prologue X2, 88 Cimarron LE, 1975 Sekai 4000 Professional, 73 Paramount, plus more
+1 Frame way too small. That is a frame for someone 5-7. That's one reason you are unable to get the bars to the same height as the seat.
Secondly, converting this bike to flat bars is going to be relatively expensive, and lower the value of the bike. Since it is the wrong size anyway, I would suggest you sell it and get yourself a flat bar bike, perhaps a hybrid. Around here, used flat bar bikes sell cheap, really cheap.
You should end up with $$ left over when you are done.