Recommissioning my old Lizard..

Hanger looks bent inward to me. There is a You Tube video by "RJ the Bike Guy" on how to correct it without tools by removing the mech and threading another wheel axle into the hole instead, then measuring the gap between the usual wheel and the threaded-in one, and bending gently accordingly.
 
Funnily enough I'm currently rebuilding one of these myself and the base was bad enough I had to get a donor bike for it (long story). But upshot of that is that I have a spare rear derailleur.

I'm inclined to agree that the dropout/hanger looks bent so check thay out first but of your certain the mech is the issue then let me know.
 
I’m sure you could have straightened that derailleur if it wasn’t a simple indexing issue? You had nothing to lose!
 
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