First, that's no rifle receiver extension, at all. It's a carbine extension, and it's not an Armalite .308 AR-10 carbine extension - those have an internal depth of 7 5/8", and they run buffers that are the exact same length as a carbine buffer from an AR15 - hence, the different internal depth.
AR15 carbine receiver extensions are standard, at 7" internal depth. We run those, most of the time, on DPMS-based .308 ARs, with short buffers - which you have, at 2.5" long.
You have the right buffer. You appear to have the right receiver extension - but you need to measure it's internal depth to be certain. You can save some time on the cutting of threads or filing the end of the extension, by making that measurement first. That way, you'll know what the problem is, and how much you need to take of. <thumbsup>
EDIT - If my math works right, your buffer might be 1/8" too short...