For saddle height, usually when the saddle is at optimal height, your feet can't really touch the ground while stopped except maybe the very end of your toes. That assumes a normal seat tube angle, not the "feet forward" geometry of the Electra Townie and other similar bikes. It's best to slide forward off the saddle when stopping, to put a foot on the ground, and then push back up onto the saddle again when you get going.
If you sit on the saddle with a foot on the ground while stopped, your saddle is almost surely too low and probably the source of your knee problems. When I was fitted to my road bike, I realized that my MTB (used on the road) saddle had been far too low all that time prior.