You should not use the small to small or the big to big combinations (cross-chaining).
And your chain is too long. There are several methods to check for correct chain length. One check is that when in the small to small combination the rear derailleur should not "bottom out". There should always be some tension on the chain. If you'll do some searching there are several instructions available for sizing the chain. Try
http://www.parktool.com and
http://www.sheldonbrown.com.
Al