I'll confess right off the bat that I'm very much a novice to cycling as a whole - I have a basic understanding of attacking, defending a position etc, but that's about it.
I'm just wondering how best to construct / advise a team for a simmed race - the default is Leader, Sprinter, a pair of Free's, and then the rest as Team Mates...
However - my team leader is almost never competitive - I have more luck with free riders getting into decent positions despite often being much less talented riders...
What should I be looking to do - I thought the way forward was to have your best cyclist as the leader, but am now not sure. And what kind of instructions should I be looking at for the other riders to try and get my team acting as more of a team and getting into decent positions...
That sounds more like your Leader is not fully fit. A Leader who hasn't raced a single day and hasn't trained yet cannot even beat much worse riders who did have proper training and race experience.
When I was a novice, I had plenty of problems devising a proper schedule, considering the fatigue of the riders and when they should peak. So here's a little advice:
Make sure that your leader has a couple of race days under his belt before the actual race. It'll show on the training bar when you click the rider in the overview menu (remember the 80/20 thingy the manual talked about? That's the thing you're looking for). When a Leader gets to a combined total of around 80 (65/15 or 70/10), he'll usually be capable to ride along decently. He probably won't win much, but he's not even close to his peak after all.
Once you have him on 70/20 or a 75/15, he'll be capable of winning stuff, but if you keep doing so for a few weeks, he'll be dead tired for the rest of the season, so keep in mind where you want him to peak
That is, if your Leader is actually capable of winning. A mediocre climber will never win any mountain stages against better riders if you ride the Tour de France.
If the above isn't the problem, it probably would help if you could show a screenshot with your leader's stats, his training schedule and what race you want him to win.