This 1x7 bike has been fine for ages but I left it way too long to change the chain. So I bought a new chain and a new SRAM 7 speed cassette and swapped them over.

The derailleur is admittedly cheap (SRAM X-4) but I feel like it should be folding back on itself when using the small cog to avoid the slack chain. I've definitely sized the chain at least a link too small but as you see, it's mad slack. It was similar before I replaced the parts but not as bad.

There's also a pretty nasty grinding/friction-y noise coming from somewhere when I put power through the pedals, especially in the lower gears. On the stand it's spinning and shifting fine, even with the slack chain

Any suggestions? I probably need a more beefy SRAM MTB rear mech?