Chainwrap! I completely forgot the the small ring is a stainless steel 22 not a 26 which means (46+32)-(22+12)=44. That would explain the too much/not enough chain situation. I really hope the derailleur will work since it is a long cage.

CravenM, I agree the position probably doesn't matter but wanted to try since the seller recommended it. I also thought that if the axle position didn't effect shifting, I might as well have it forward even if the benefit was slight. Just to confirm, the wheel all the way to the rear is the way to go for a derailleur set up, right?? If so, I will remove the screws and pull the wheel back. However, if you haven't see the dropouts on a Crosscheck, they are looooong.