Yes. If the adjustment is too far out, the MC piston won't retract enough to expose the "fill port". That will leave pressure on the brake tubing, thus dragging. I just use common sense when adjusting the booster output tip.
Keep offering the MC to the booster. Your brake tubes should be flexible enough to allow this while bolted up. Start with the adjuster full in. That should give play in the brake pedal. Keep screwing the tip out and testing, until the adjustment just gets rid of the play, and just barely pushes the MC in as you bolt it up. You should be able to tell as you hold the MC against the booster. Not much different than adjusting the cable brakes on a bicycle. While in there, assure that the MC piston has a strong spring, since that is all that returns the brake pedal. With MC off, insure that the brake pedal swings easily, without drag from booster or linkage. With vacuum from engine idling, the booster should follow the pedal motion and you shouldn't hear vacuum hissing, except as you move the pedal (lets in atmospheric air to produce forward force). Insure the booster also retracts smoothly.
Re brake pedal height, if you drive w/ 2 feet in an automatic (as I think driver's ed teaches today) it doesn't really matter. If you brake w/ the right foot, you don't want the brake pedal much higher than the throttle pedal or your foot might snag when moving between pedals. Back off the brake lamp switch until done adjusting the pedal. That is the biggest mistake. The switch should just sense pedal motion, but not affect it. For some reason, many people assume the pedal is supposed to bottom-out on the switch, which makes no sense if you think about it (flimsy sheet-metal bracket). But, do adjust it so the switch assuredly turns off, otherwise your brake lights will be on all night and you won't drive to work in the morning.