Measure your "bike inseam" (not your pants inseam) by standing with your back against a wall in your stocking feet with your feet about 10" or so apart. Push a moderately thick book, spine up, between your legs until it meets firm resistance. Measure the disstance from the floor to where the top of the book hits the wall. That's your bike inseam. Compare that distance to the standover height. The stand over height should be at least 1" less than your inseam measurements.
Unless your legs are abnormally long or short for your overall height, this is a good starting point.
If the inseam of 34.5" you gave was measured this way, the 25" frame just makes it and will allow you to get the bars relatively high which is desirable for touring.
I hope your dealer will work with you to get the stem length and bar position that are comfortable. It sounds like they aren't familiar with Touring bikes at all and tried to size you based on sports or race bike fit.