I recently received a trek 1000 54cm roadbike and was sized over the internet. To make a long story short the bike seems to be a bit short. I am not able to get full extensions on my cycles. I have raised the seat pretty high but that just seems to cause the handle bars to be even lower. This is very uncomfortable even on short rides. I am 5' 7'" with a 32 inch inseam I weigh 168lbs. I have ridding moutain bikes for the past couple of years and this is my first roadbike. How difficult would it be to raise the stem to accomodate for the seat post being raised? Would this help out? Any suggestions?

The best answer is to run down to your LBS and get sized buy a pro. They will set you up with stuff that fits in your price range. They may even do this for free if your buy the stuff from them.

Just get a new stem with more rise (and maybe longer).
If you're really stuck, you can get a stem extension to add a few inches to the stem height.

However if this is your first road bike, perhaps you're just not used to the position yet. It's fairly normal to have 2-3 inches of drop between the top of the seat and the top of the bars. If you're 5' 7", a 54cm frame doesn't sound like it should be way out.