Wheel Won't Fit in Dropout with Derailleur Attached

I was able to shave down the bolt just a bit more and slightly back off the nut and all seems well!

I took the bike for a short 100yd ride and it seemed to work OK other than needed to adjust the gears a bit. I can't use the largest rear gear as the rear wheel hub is too wide and the derailleur rubs. I also can't use the smallest rear gear as the chain slips right off of it despite adjustments being made.

I am having an issue with the chain slack when I attempt to pedal backwards. When I do so, the chain slacks to the point of popping off (if I go too far). I've done research, and most point towards a dirty chain, freewheel, etc but this bike has never seen outdoors (other than the shirt ride).
 
I was able to shave down the bolt just a bit more and slightly back off the nut and all seems well!

I took the bike for a short 100yd ride and it seemed to work OK other than needed to adjust the gears a bit. I can't use the largest rear gear as the rear wheel hub is too wide and the derailleur rubs. I also can't use the smallest rear gear as the chain slips right off of it despite adjustments being made.

I am having an issue with the chain slack when I attempt to pedal backwards. When I do so, the chain slacks to the point of popping off (if I go too far). I've done research, and most point towards a dirty chain, freewheel, etc but this bike has never seen outdoors (other than the shirt ride).
Look at some Park Tool videos on chain length and B-screw adjustments. The chain might be one inch too long.
 
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