Cannot calibrate “upgraded starpointer finderscope” for Celestron AstroMaster 114EQ
I do not have one of these scopes, so my answer reflects general knowledge of astronomical telescopes.

Yes, the lens should be at the far end, away from your eye.

As for the alignment question, you can probably get a bit more movement in "left/right" direction by loosening the screws that hold the base of the finder to the scope, and twisting the mount and then re-tighten it.  For the up/down adjustment, you may need to use a shim (a thin bit of metal) to adjust the angle, but the adjustment built into the finder is normally adequate.  

I doubt if there is a problem with the scope - if you can get a good focus, that's fine.