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@Smallfurry
*4) The stem wont go any lower into the steerer as shown in lowest position in the picture. Do you think this is due to the taper of the stem? Or if i cut an inch off will it go down further? - if you cut an inch off you'll lose the expansion area of the stem that engages with the steerer. - you'd be better off trying to work out if there is something thats blocking the stem inside the steerer*
Looks like quite a short steerer. There is basically not enough steerer for the stem to fit further into (I've got a 20" frame with a headtube too short to allow the stem to be fully inserted) . Also there is often a taper at the bottom of the steerer, so it it unadvisable to force it too far down and try and tighten it there. If you want to lower the bars, you need either a track style stem which angles down, or one with a shorter body.