I would just get a longer B screw if you're satisfied everything else is correct. Maybe somebody lost one and stuck a shorter one in by mistake? Maybe the spring lost tension over time? MTB guys do this all the time to run bigger cassettes.
Now that I've looked at the photos in close up, it appears that the tab the B screw goes through is bent outwards. II you bend it so it meets the dropout square on the screw will be effectively longer.. Maybe the derailleur hanger is bent. Bike shops have a tool to check for that.
Why do you say he screw is all the way in? There are more threads showing. I'd get a couple new screws anyway.
Screw isn't all the way in the photos because I ve been adjusting it in and out as I've been trying to diagnose, but it has no impact whatsoever on the hanger height when the chain is on. Whether it's all the way in or all the way out - no difference
I'm not seeing photos of it in the Big/Big gear combo. This will tell a lot about chain length. The position of the derailler arm has a lot to do with clearance. If the guide wheel is offset from the arm pivot it will move in and out from the cassette as it swings. The chain length detrmines where it is in the swing. Are you running the original chainring sizes in the front? You can maybe run a shorter chain if you don't use the Big/ Big combo.
I too noticed the tab - it used to be bent a few degrees more than that, so I've already bent it a bit but any more and I start to deform the hole and the screw won't screw in.
I've owned the bike since new (early to mid 90s). So it's the original b screw
There are some photos on this page showing how chain length moves the deraileur arm. and idler position. The last one I used a zip tie to "shorten" the chain and see what happens