This is a projection eyepiece adapter (if true then it means it is possible to insert an eyepiece inside the barrel, snug it with that screw, and the eyepiece is used to project an image into the camera). This is a bit different than a normal camera prime-focus adapter.
The issue is that a telescope is meant to have a specific focal length. If you have a 700mm telescope focal length, it means the image will come to focus 700mm after the object it begins focus at the objective lens on the front of the scope. The purposes of the focuser at the back of the scope is to move the eyepiece or camera forward or backward to help it find that 700mm distance.
Normally a refractor includes a 90° diagonal so you can look down into the telescope eyepiece instead of needing to get down low on the ground and look "up" through the telescope (and save you from needing to visit a chiropractor for all the back problems that would cause). The 90° diagonal adds about 50mm to the overall length that light has to travel before it reaches the eyepiece. The telescope is counting on that extra bit of distance behind the scope as part of the overall focal length (if an eyepiece were inserted directly in the back without the diagonal you would find you need to focus all the way "out" and it still may not be far enough to allow the scope to focus with a normal eyepiece.)
A DSLR sensor needs to be at the back of the camera body to allow room for the reflex mirror to be able to swing clear when taking a photo. This adds yet another roughly 50mm (varies by camera manufacturer but in rough round numbers ... that'll be close to what it adds).
This means the image sensor on the camera is too far back to achieve sharp focus. You end up focusing the scope all the way "in" and the image is just coming to focus ... but runs out of focus travel before real focus is achieved.
To compensate, you can remove the 90° diagonal (subtracting somewhere close to 50mm of distance) and attaching the camera (which adds roughly 50mm of distance) and now the sensor is "just about right". It should easily be in range of the focuser travel to come to sharp focus.
You've got a long barrel on that eyepiece projection adapter and it's added probably at least another 75mm and that may be too much. I'm wondering if you are focusing all the way "in" and this is as sharp as it will get for you.
It *may* be possible to remove the barrel from the assembly. Often the T-ring is simply threaded on the back, and the nosepiece that inserts into the focuser is threaded on the front. You may be able to unthread the 1.25" nosepiece, un-thread the T-ring from the back ... and if they both use the same T-thread (M42 threads), you can thread them on to each other and create a shorter adapter that doesn't give you focus distance problems.
Otherwise ... consider picking up something like one of these:
https://www.amazon.com/SVBONY-Telescope-Microscope-Astrophotography-Accessories/dp/B0114884YA/
That's a T-ring and 1.25" nosepiece ... both have the T-threads and go together to make a short camera prime-focus adapter that should easily put your camera sensor at a distance where your focuser can bring you to pretty sharp focus.