Thanks for the reply Mac. I got this bike just last week and had a fitting for it, the saddle height feels right for me (my old bike hurt my knees as the saddle was too low I think). The saddle wasn't orientated or moved back or forwards for me though so I will take your advice and bring the bike into the house and adjust it as I stand adjacent to a full length mirror so I can see my contact points and try and adjust it so that the unpadded part of me is not making so much contact with the saddle.
I think part of it may be down to the fact that I am overweight - 14 1/2 stone at 6' 2" which is part of the reason I have taken up cycling. I am a classic male apple shape which means 99% of my excess fat is on my stomach and hips, I have a fair old paunch for my weight and that probably doesn't help the fit of the shorts as they were probably designed for someone slimmer than me in mind.
I think I may have to consider getting a new saddle or a gel cover for the existing one. I didn't want to do it at first because I wanted to get used to a proper road bike saddle but that is not what is important really, getting fit and losing weight is what matters and I'm not going to do that if every journey is painful as the bike will just end up in the shed. Which would be a crying shame as I'm really enjoying cycling.
At 6'1" and 18 stone I have a fair idea of the additional pressures a bit of weight can apply
things certainly ease up with loss of weight and increase in fitness. Like you I got knee pain, and lower back pain, from a too low saddle. Moving the saddle up made a big difference though I then suffered another kind of knee pain when I'd put it a bit too high and far back. This only materialised on my first long ride after I'd passed the 50 mile mark. I was lucky to be riding with some good folks on here who helped me sort it out. I'd try this and get someone to help you with the measurements:-
http://www.competitivecyclist.com/za/CCY?PAGE=FIT_CALCULATOR_INTRO&INTRO_LINK=NOREDIR
This gives you a little table of 3 possible fits, I find a mix between the more relaxed two, Eddy and Frech, works best for me.
Saddle height I put a flat board on top of the saddle and measure from centre of bb to lower edge of the board, along the line of the seat tube. Remember that for any measurement that is going to be used to track a variable the accuracy isn't that important. Just make sure you measure the same way each time.
Saddle setback, I get one of the kids to hold the bike upright with the rear wheel against a door. Then I measure from the door to the nose of the saddle and then the door to the centre of the bottom bracket. The difference between the two is your setback, I'm good from about 65mm to 80mm as an upper/lower limit.
Bear in mind that as you raise a saddle it will naturally move backwards with the angle of the seat tube, and vice versa for lowering it.
Finally I'd sort out the saddle level, I use a spirit level and I prefer the saddle to be slightly nose up...very slight though. If you have a two bolt seatpost clamp this is easier than a single bolt, but still doable with either. Most fitters would start with a level saddle and work from there.
I'd do all of that before even thinking of the distance to the bars or the height of them. I made the mistake of trying to work bars back to saddle my first time and ended up spending money on some bits I didn't need once the saddle position was correctly adjusted.
Another very good point I picked up from the Sheldon Brown website is around comfort, distance and fitness. He points out that discomfort blamed on saddles or position on bike may just be the result of riding further than your current fitness levels are good for. As you tire you pedal less, so more weight is carried on the other two contact points and also your posture slumps. Try it at the start of a ride, pedal hard and see how much weight is on your bum and hands then coast a bit letting yourself slump and feel the difference....it's really noticeable.
Oh and keep a note of all your measurments, any changes you make and carry the correct allen keys with you to make finer tweaks on the fly. It sounds like more work than it is, I found the fit site linked above got me pretty close first time. I can cope with quite a variance in bar position for riding if my saddle is set right. This then allows me to assess where my hands keep wanting to go to tell me whether I need to alter the reach or height. I find I need some miles for this last bit rather than just relying on a static setup in the garage.