Jim,

Make sure your rear axle is adjusted equally on both sides of the swing-arm. If the sprocket is cocked at an angle to the chain line it will run rough, make more noise than normal and cause premature wear to your chain and sprocket. Also ,make sure you have enough slack or freeplay in the chain so it does not bind up when you rotate the wheel by hand ,with the wheel off the ground.
I checked my rear wheel and my spacers stick out as much as the ones in your photos so I think this is normal. The spacers are a tight fit but should come out of the bearing with some very light tapping. Make sure they are clean as any dirt in between them will take up the space and create an interference fit making them difficult to remove. Hope this helps.