The chain should be on the largest cog, unless you can bench press a Buick. You should be able to rest a yardstick across the saddle and top of the handlebars and have it parallel to the top tube (the one you stand over when you get off the bike). Some people like an "aggressive" sitting position with the seat higher than the handlebars. A similar seat/handlebar adjustment for other riders can be very uncomfortable (sore neck, sore wrists, tingling/numbness in hands). If you stand over the top tube, with feet planted firmly on the ground, and lift the bike bike up level there should be an inch or two clearance between the tires and ground. If you have 3 or 4 inches or more clearance, and have to raise the seat up high, the bike frame size might be too small. If it is the right size, you can ride the brake hoods on the handlebars, as long as you can effectively stop the bike using the levers in that riding position. You can also try tilting the bars up just slightly. If the problem persists, and it's the correct size bike for you, a performance flat bar road bike might work better for you...as a last resort...when all else fails. Remember one thing...any skill you pick-up working on this bike will be a great asset if you become a dedicated cyclist. Bikes breakdown while you are touring, commuting, etc. Being able to diagnose and fix a mechanical problem out on the road can really save the day.

Shifting smoothness...shifter levers screwed down too tight? Everything oiled? Cable slack taken up? Cable moves easily back and forth inside the cable housing? The adjustment screw on the derailleurs properly set? Not too much else beyond this...unless somebody else reading can think of something. BTW, make sure you are pedaling at all times when shifting. Working with friction shifters is a bit of an art form. That isn't a bad thing. You have you listen for "smoothness" and tune it in with slight adjustments of the levers if the "smoothness" isn't there. There are alot of pluses with friction shifters, especially if you have ever broken a "brifter" and seen how much they cost to replace. IMHO, friction shifters can also take more abuse and neglect. That can make them better for certain types of riding...touring and commuting...at least that's my opinion on the matter.