It looks as though that rifle is way overgassed. Setting 1 is almost fully closed. I would still consider a heavy power spring from Sprinco or similar. I guess it depends on what you plan to do with it but I would want to be more in the middle so you have wiggle room with different ammo
Baffles may be of larger diameter than the end cap. For example, SilencerCo Omega has a 7.62 end cap and also a 5.56 to help cut down a few decibels on the smaller diameter round. Just need to make sure you put the larger cap back on if using it on different calibers
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You can order alignment rods from McMasterCarr for less than $10.
Looks like baffle strikes to me. Are you using direct thread or ?
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