Have that style Drawtite, and agree that there is damage to the head where the ball mounts. BUT, that won't be the cause of the problem. The whole drawbar is heading uphill!! You will never get enough washers into it to get the tilt right. In its previously life, the drawbar has hit the ground, but that drawbar is solid 2" steel, with a strengthening rib, and doubtful it is bent. If it actually is, maybe where it enters the receiver. Need to see a picture with it out of receiver and with the head removed to see any bending or any other damage.
If it's not bent, don't know how to fix, other than maybe having the vertical part cut off and rewelded at a useable angle. Also, a 1" or 2" riser ball would give you more room for adjustments to the bars.
One big question, is the tow vehicle actually level (??!!) or is the nose down towards the street??