Yes,yes,yes and yes the tow hitch height has everything to do with the way the dolly tracks. Tow dollies, trailers, utility trailers with axels are made with a certain amount of "tow in" just like your car when aligned will have the front wheels towed in to be self centering. If you are absolutely sure your ball hitch is the proper height and there is no adjustment on the dolly to set tow in then you will have to get a welding shop or a frame shop to heat the dolly axel and bend it to have proper tow in.