Took the bike out again for a road test after reseating the front wheel and it was just as bad as ever. Also the shifting just does not seem to be consistent no matter how much I adjust the limit screws. With the bike all assembled it is difficult to perform the tests indicated on "My Ten Speeds" site.
This has been a lesson for me about working on old bikes. Next time I will make it a point to test ride before investing a lot of time on rust removal, new tires, cables, bearings, etc. Also don't think I will undertake any more low end entry level bikes although the lugged frame on this one is still in pretty nice condition.
The space between dropouts on the rear is around 131 mm and it just accommodates the rear axle in fact is a little tight. Certainly not 120 or 125 mm as indicated in "My Ten Speeds" info.
As well as possible I tried to measure distances and look for deformities but without success. The headtube looks to be perfectly aligned with the fork from side view. The fork does not appear to be out of line, either with the head tube or with itself.