If the face is shut down with this setup, then I suspect you have it:

1) Too far back in the stance (like you mentioned). The ball position does not change. You play a 7i in the middle, and a Driver in the font foot.

2) Your hands on the club probably need adjusting. The picture is just to let you see the right hand position. If you only change that, then you might be using an old grip that is causing the shut face. You want the left hand palm and right hand palm on top of the club. This puts the club more in the fingers. Need to adjust the club alignment as well to get the face square.

3) There is a good possibly that it "looks" shut to you because in a bad grip / hand position, the face looked normal. But now changing it to a proper setup, it will look different to you and more shut. This is normal. So be patient with change and you will see good results that will start to look normal again.