Ben, im not sure what kind of money you have, but the gear that others have listed for you can be very expensive (ie padded cycling shorts, patagonia capilene stuff)
ive been wearing (anybrand) polyester polarfleece shorts/pants as a base layer with great results for years in every season! The reason you are chafing is because youre wearing cotton in the wrong place, your boxers are in a bunch, and it sounds painful.
Cycling tights/shorts are good, but they arent for me.
if youre a frugal baggy pants cyclist (like i am) you have to try fleece as a base layer.
good luck and fast healing.