You need to explain a couple of things:
What do you mean when you have to jack the seat up too far? What do you mean by "too far"? If you're not making the minimum insertion depth on your seat post, then you need to buy a longer seat post(or get your dealer to swap it for a longer one). Otherwise you risk breaking off the seat post and possible damage to the seat tube.
What size frame do you think you should have gotten? If the frame is flat-out the wrong size for you, there really isn't anything you can do to change that. Never, never, never buy a bike that is the wrong size for you, no matter how cheap it is. That said, some people are on the size boundry and could go either way on a frame size. They can go with a larger frame and shorter stem and seatpost, or go with the smaller frame and longer stem and seatpost. It is quite possible you are in the latter catagory.
To answer your question about stems, a 120mm stem with a 5 degree rise will create a longer cockpit than a 120mm stem with a 15 degree rise. To increase the stem angle and maintain the same cockpit length you will need a slightly longer stem.
Just as a frame of reference, for a cross country bike you probably want the handlebars about 1" below the seat. This is just a general guideline. People that ride more technically aggressive terrain generally like the bars a little higher. If you need to go with a steeper stem and a riser bar to get there that's fine. Also, if your current setup has spacers above the stem you can move those spacers underneath the stem and get some height also.
FRC