How high to pull them up? They should go right up to the top of your thigh --- this will keep them in place so they won't fall down below your shorts. Oh, and they go under your shorts (not over your shorts).
I find if I accidentally pull them up too high they chafe - about two inches from my crotch is about where the safe zone ends. It still leaves me plenty of overlap so I don't have a cold patch of skin sticking out.
"Sharing the road means getting along, not getting ahead" - 1994 Washington State Driver's Guide