Bearing/Axle Compression Question
 

I have an aluminum rear hub with a thread on freewheel. When I snug the skewer, I notice that the freewheel spins less well. Does that mean I need to reset the bearing adjusment on the axle?

Freewheel shouldn't be affected by axle-compression in any way because it's not attached to axle.

OK. Also, as I look at the chain clearance, it looks too little. This is conversion of a 6 speed to 7speed. Do I need a spacer to add chain clearance and if so about how many mm thick?

You only need about 3.5-4mm of clearance between the smallest cog and the inner dropout face. Spin the crank by hand and and watch how the chain goes through that area and if it rubs the dropout significantly. If not, nothing to worry about. Otherwise, add enough axle-spacers on the right side to achieve 3.5-4mm of clearance.