I would agree that those are not decent groups for 100 yards. I had to ask, because some call not touching each other “not decent groups”.
I don’t have a lot of input, but saw areas where there may be a few more questions. Hard to imagine a barrel not liking 165’s with a 1-10 twist.
As for the torque, I would want to make sure the barrel is torqued to the required amount and mounted to the upper properly. It appears to have come as an assembled unit, but it might be worth either A) disassembling and reassembling, or B) sending back to them. Might be worth a call to customer service to see what they say, but if all is assembled properly and you’re using decent ammo and feel confident it wasn’t the shooter - something is out of spec. Did you have anyone else shoot it? Same results if so? How does the lower feel when mounted up, fairly snug? It really shouldn’t be part of the issue, but I’m no expert. Just thinking out loud so to speak and hoping to draw better answers from the experts.