A couple of pics of the other dilemma.
Turns out you need that black plastic washer type thingy because it prevents you from tightening the barrel adjuster down too much and pushing out a a tiny cylinder. Ask me how I know. I've now glued and used thread lock too to keep there. Also I used a Schrader valve cap for the black washer thingy on the barrel adjuster. I couldn't find the original and didn't want to rob one of another derailleur I have. And since the baby was asleep couldn't go to the hardware store. Anyways works good enough.
Now to reinstall and put another wheel on my Classic to see if it's the rear wheel making the grinding feel and noise.