How about the fore and aft seat position. And did you have your shoes on or off when you checked the seat height? I can't say for sure if this is the proper way (shoes off) but I do remember reading some where that this should be done with just your socks on. (no shoes) JMO

Belive me I feel your pain with knee problems. Mine gave me fits for over a year.

Edit: And the heel should just lightly touch the pedal