Boofo - as I mentioned, here are a couple of screen shots with a bit better clarification.

There's two, and I had to attach them. One is the forumdisplay - threads in this forum should be sorted according to their 'last edited by' date (unless, of course, they are brand new threads and haven't been edited yet, then they sort according to the creation date).
The second is the threaddisplay - the text in the postbit says "last edited on:", but the date and time is displaying as the 'created on' date, not the edited on date/time.
I do hope this isn't too complicated.

If it helps, there may be a way to incorporate the "edit with reason" hack which displays the edited on date and time, but does not showup for admin when the option is turned off in the acp.