I'm 5'10 at 163lbs and I wear a large bib. It sounds to me like you might have really really skinny thighs? I can't really imagine a medium fitting you as I would have recommended an XL based on your height/weight. You are correct, they should be tight all around meaning you shouldn't have any scrunched up or looseness.
My recommendation is to try on a different brand. As for the jersey, it should be fitted/tight all around and it should sit low enough where if you were to raise your arms up your belly wouldn't be exposed. It also varies depending on brand.