You mentioned stretching. I assume you did PT for the IT band issue too? Keep up the stretching so at least you stay flexible and it doesn't worsen. As far as having knees close to top tube, that is a very good position to ride. If you find it comfortable, most definitely do it.
I suggest you get a cadence monitor. You are supposed to be between 75 and 110. I am guessing your knees would like the higher end. You may find you spend too much time mashing (the lower end) and that will be much more likely to give you knee problems. If you're a newbie, you probably don't know what your cadence is. Mashing all the time is a common newbie mistake. Spin at the 90-100 end all the time and you may find your knees last a whole lot longer.
G'luck