Regarding the grinding noise, I have no experience with this Simplex but it seems to me that chain line would be exceptionally critical with a long pulley arm that is oriented like this, almost pointing at the chainrings. The chain will want to drag the lower pulley sideways until the pulley arm is pointing at the chainring.

My experience with the shorter arm pull-chain Simplex derailleurs is that they are quite finicky about chainline, optimized perhaps for 4 speed freewheels.
Brent