We consider power allocation and relay positioning with the objective to minimize system error probability in a dualhop regenerative relaying system operating under co-channel interference. First, assuming fixed relay location, adaptive power allocation at the source and the relay nodes under joint power constraint is presented. Then considering fixed power allocation scheme, the optimal relay position is obtained. Results show that optimum power allocation, optimum relay location and joint optimization of the power allocation and relay positioning significantly improve the system performance in terms of error probability compared to uniform power allocation and mid-point distance location for the relay node.