One of the needless bummers in cycling is knee pain associated with improper cleat mount.
Another is loss of power due to the same problem. Here is our easy three-step process to ensure that your cleat is in the right place.
Your cleat should be adjusted so that the center of the bottom bracket spindle passes through a point precisely one-third of the way back from the front of the shoe. Measure the entire outside distance of the shoe, as the diagram below indicates. Realize you may not know whether you've got this exactly right until your shoe is mounted on your cleat.
Next, your shoe should be angled approximately like you walk. If your left foot splays out when you walk or run, your cleat mount should likewise reflect that. If you are pigeon-toed, set your cycling shoes up the same way. Your feet want to go a certain way when you walk or run, and they'll want to do the same thing when you ride.
However you might find that you are able to generate more power when you ride somewhat more pigeon-toed. If this is you, I recommend floating cleats, such as Time, Speedplay, or if you ride Look-compatible systems choose the red cleats, not the black ones. I think floating cleats are on-balance less likely to give you problems than rigid ones.
Your cleats can also be adjusted so that the shoe is closer or further from the crankarm. In general you want them as close as possible to the crankarm, which means adjusting the cleat toward the outside of the shoe. However, if you are splay-footed, you will need to move the cleat toward the inside of the shoe some distance, so that neither your heel nor your maleolus (ankle bone) will brush the crank or the chainstay. Your feet should not touch the crankarm at any time during the pedal stroke, but should come as close as possible without touching. This is especially critical measure when using any of the new splined cranks in general, and Hollowcranks by Shimano in particular. These cranks have less heel clearance than the old square-hole cranks.
Voila, your cleats are mountedthis according to the gospel of Dan Empfield, aka Slowman.