some thoughts.
always need a good start point - best is with the pedal axle directly under the Ball O Foot, when foot is mostly horizontal to ground - that is usually with the heel/sole is very, very slightly higher than Ball O Foot sole area.
saddle extension is important... most riders won;t have knee problems if their extension is a bit high, but you lose power and could cause problems in the butt and sizbone area (pinched blood vessels and nerves) and rocking hips WILL cause big issues, so too high is not great.
Too low can cause real knee problems !
good start point for saddle extension - get on bike with your sidis, don;t worry about cleats for now. Get bike moving down road. put you HEELS on the pedal, pedal BACKWARDS. If you have to rock your hips to pedal smoothly backwards - too high. Lower saddle until you can pedal backwards smoothly, no lower !!! good start point. After riding a bunch you will fine-tune a bit up or down (in mm)
now the really hard, and very important part - cleat rotation
IF you have some cheap 'FLATS' Hanging around, those with old school cages work great, put them on the cranks
Put 2 layers of gray Duct Tape (any light color duct tape) on the soles of the sidis.
Now go ride the bike for some short distance, pick a very comfy gear which you don't have to 'push', just enough pedal pressure to keep your feet down on the pedals. You may have to do this a couple times before you get it done properly. ride around the block a few times, 1/4 , 1/2 mile
When finished, the duct tape should show a clear mark/line where the rear cage of the rattrap pedals have marked the tape.
Each foot/leg may show mark is a bit different, very normal, expected.
THIS is the alignment mark for rotation on that pedal side. Cut the tape at that line, then MARK the shoe sole (sidis) with some form of mark/marker line which you can see when you remove the duct tape. DO for each side.
THIS Line IS for the rotational alignment of the cleat - NOT necessarily where you put the cleat fore/aft - that is still determined to be the Ball O foot over the axle... Use the rotation line to orient the rear edge of cleat with the mark, parallet.
This will put your foot in the natural rotation of your foot/leg which you're accustomed to using...
if you've already caused some small continuing knee discomfort, you may need a few days to get over that...
Many others have other 'issues' which might impact on things like shimming, 'Q' and other considerations. But don;t assume - start with a good 'start point'.
Insoles
cushion insoles will help for pressure discomfort - I use them - not as a replacement for more structured insoles.
Road cycling shoes and clipless pedals accentuate things which never affect on soft sole shoes and unconfined use of flat pedals - just the way it is.
"float' in clipless pedals help a lot, but first you gotta get the cleats close to your optimum place - Rotation is critical for that.
Ride On
Yuri
EDIT: my way sets up to a natural position for foot/leg. There are other methods which works towards knee over pedal or straight sole when in pedal and a bunch of other alignments....
They may work. Mine seems to work for me and anyone I've helped get their cleats aligned...
... oh, and do remember to remove all of the duct tape before mounting the cleats... LOL!