The high limit screw is also the outer limit screw. HIGH gear is the smallest cog on the back, largest chainring on the front. If you check parktool.com/blog or sheldonbrown.com both explain which is which. It does not matter how much you screw in the limit screw - what matters is whether the bottom of the screw hits the stop on the derailleur - otherwise it's doing nothing. I'm wondering now if the wheel is compatible with the 7 speed cassette, or if the cassette needs a spacer behind it.
http://sheldonbrown.com/k7-7.shtml#stay

Chains have to be much too long to cause a problem, and then only on the small chainwheel and smaller cogs.