sounds exactly like the problem i had. IT band injury. i went to a professional fitter recently and he moved my cleats to where the first metatarsal contacts the pedal. among other things he made sure my knee was directly over the pedal at the 3 o'clock postion. i got a shorter stem, seat height changes, yadda yadda yadda.

i'm sure the cleat position was screwing me up for the longest time. my knee problem got really bad and i couldn't ride more than 15 miles without horrible pain. it would tighten up at first and then ache and then become a sharp pain on each downstoke. so far i've been riding pain free (knock on wood).