I believe that the correct hammer to string strike distance may vary
slightly between uprights, but 47 mm is probably adequate for most old
instruments.

If at rest, the hammers sit proud of the rest rail, then the key
capstans need adjusting.  I lower them until there is just the tiniest
amount of lost motion.  The tests that I use are these:

 - I very gently lift the hammer rest rail using the elbow that
connects to the soft pedal lifter rod.  A couple of millimetres is
all that is needed.  The hammer should move instantly. If it does not,
the capstan is too high.

 - I then press very, very lightly upon the key so that the whippen lifts
the merest discernible fraction, but the hammer does not move.  If the
hammer does move upon initial contact with the key then the capstan is
too high.  If I have to press down more than a light touch then the
capstan is too low.

As for the noises, this must surely be related to missing or worn notch
felt, or perhaps very hard leather on the hammer butt.  Of course, the
jack tips should also be re-leaded [treated with graphite or other
suitable lubricant].

But the best advice is to be found in Art Reblitz' book, "Piano Servicing
Tuning and Rebuilding."  Chapter Five gives a most comprehensive
approach.

Roger Waring - The Pianola Workshop
Solihull, United Kingdom
http://www.pianola.co.uk/