Where do I start?

Its fine that everyone is throwing brand names at you and whilst a Colnago or Pinarello is a great bike, you're giving up the MTB because of back problems so the only thing you need to be looking at initially is the fit of the bike. Your concern to begin with should be "Does this bike fit me properly and how will my back be after 50+ miles on it?"

You want a steel frame, and with a budget of £1000, why not go to a frame builder and get one custom made to fit you and your back perfectly. OK to begin with, you may have to compromise on some of the components hung on it, but if I was in your position I'd be spending ££££ on a well fitting custom frame and accepting that I'll have to upgrade the components over the next 12 months or so.

Invest in getting a bike built around your back problem now and you'll be glad you did when you're still cycling in 30 yrs time.
 
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