Although there is alot of expertise and experience on this Board - and listen to what all have to say - the best way to deal with your problems is to 1) work with your doctor and 2) work with your bike shop.

I'm assuming your doctor is aware you are cycling. I'm also assuming your doctor has recomended certain exercises to address your knee problems. Most likely you need to strengthen your hamstrings or inner thigh muscles in order to off-set/allieviate the IT Band issue. Your doctor should help you address these issues and I would even think about joining a gym and working with a licensed trainer.

As to riding, make sure you regularly check back in with your bike shop to make sure your fitting is working. Usually "fine-tuning" is needed. I'm alittle confused about the reference to the top tube. You should be riding with your legs as close to the bike frame as possible. If your knees are sticking out, you will have knee problems. But if your legs or knees are hitting the top tube, your seat is too low. This should not happen. You will have knee problems if your seat is too low.

Since you are a newbie, try not to do too much. Start out with short rides. Work on form. Learn how to "spin" this relates to the rpm or rotation of the crank arm per minute. Proper form is 80 - 90 rpms. If you fine yourself pushing the pedal and turning at less than 80 rpms, your gear is too hard and you will have knee problems. Remember cycling is an aerobic sport. Also make sure you don't spin too much. That will also cause knee problems. Learn how to swift the bike correctly (your bike shop should assist with this). You need to prevent "cross-chaining". Again ask the bike shop to explain.

I would start out ding 10 - 15 miles max. Get comfortable with that and then increase mileage. Work on flats first then add hills when your legs start building muscle and strength. Good luck. Give yourself time to built up strength and expertise before pushing. Nothing worse then investing money in a bike you can't ride because you caused further problems to your knees.

Good luck and have fun!

PS: Definitely go clipless! For knee problems I recommend Speedplay. Good pedal to learn getting ina nd out of. If you buy the road version, make sure you also get the cafe covers. Well worth the investment! All of the Crank Bros. pedals are good as well.