Try using a traditional bullseye target. The silhouette target does not give a precise point to aim at, so will make it harder to keep a consistent group. Especially since it is all black, and the sights are black
Something like this:
http://www.targetz.com/targetzlib/10049.pdf should work well. (
www.targetz.com has a bunch of others as well, great site)
Second, as others have said, the shortest distance the sights are adjusted for is more than 25yd, so it will always shoot high at that distance. Moving the slider further forward will just make it shoot higher. No worries, just aim for the bullseye each time, don't try to compensate by aiming low just yet. The bullets will hit high but you will be able to see the group size even if it isn't on the bullseye.
Finally, what is your sight picture like? You should be centering the front sight in the notch of the rear sight and with the top of the front sight even with the top of the rear sight. Line that up with the front sight right on the bullseye and slowly pull the trigger. If you catch yourself flinching or jerking; back off, take a deep breath and focus on a smooth pull. A slip-on limbsaver recoil pad may help if you are flinching. The steel buttplate and recoil on these rifles can make the shoulder sore and lead to some bad flinching.
Some other things: I would try this before you put the scout scope on. At 25yd, either the rifle is defective, or you just need to get used to it. Throwing parts at it will just confuse matters.
Also, you are remembering to clean after shooting surplus ammo? Remember, it is corrosive. Throughly swab the bore with water or windex as soon as possible after shooting to remove the corrosive salts from the bore, otherwise it will rust.
HTH
