Originally Posted by cyccommute

First, yes, your chain is too short. It might work but you risk damaging the derailer and dropout if you botch a shift. But you can't simply "add a couple of links" to a modern chain like you did in the past. The pins are peened so that the chain can take more side force to shift on a narrower chain. You can use a master link but you can't just push out the pin and push it back in again like you could in the old days. The chain will fail.
The rear derailer doesn't care if it is upside down or right side up. It simply doesn't matter. .......