So, I'm assuming this bike has push-pin adjustments (i.e. holes that you adjust by pushing the pin into)? I've taught cycle classes for several years and have recently given up all classes that have this type of adjustment.
I'm 5'1" and although I have a 29" inseam I could never really get comfortable on this type of bike and am now dealing with some over-use injuries.
If you can't get the seat at a comfortable level and you plan to use this bike a lot, I would actually consider returning it and getting something with infinate adjustments such as a Keiser M3 w/computer or something of that ilk.
If you make too many adjustments and they still don't work, remember that they're unlikely to take it back. Sometimes it's easier to just admit it doesn't fit.
Vertically challenged, but expanding my horizons.