"he thought my reach was ok by some other measurement, and that I needed to just "toughen up down there" and cyclist develop calluses over time."

I'm sorry, but what a jerk!!! Yeah, there's some adjustment to the whole riding thing, but BLEEDING of any kind does NOT need toughening up! I bet if it was HIS private parts doing that he'd be singing a different tune. That would be my last visit to that shop.

You might try dishwashing soap on the desitin and let them soak, then be sure to rinse the heck out of them. Anything that will cut the desitin will probably not be real friendly to the shorts, but I can see how you wouldn't want to be riding around with a skunk stripe on your rear

One other thought, you might want to try A & D Ointment -- it's in the diaper rash creme section of the store, but it's clearish gold, slightly more greasy (in a good friction relieving way), and should not leave as visible stains to deal with. I did use this some when I first started (before I found Chamois buttr) with pretty good success. I love the Chamois buttr, but don't know if would be enough to help you know since those parts are already injured- ya know?

Good luck with the stains and fit issues - you are MUCH tougher than me.