Awww! I love the black pony-- the barrel pony I used to ride looked exactly like him- same back sock and all.. Memory lane!
Your chest collar-- you should be able to slide your hand between it and the horses chest easy.. it shouldnt be tight but it bein too loose will cause it to rub. I think the way you have it on (buddy) is fine but id loosen it maybe one notch-- Its not to keep the saddle from movin- the point is to keep the saddle from slidin too far back and to keep it from spinnin all the way around to the horses belly if somethin should go wrong.
I hate a felt pad, lol. Seems like they have a tendency to roll the saddle and I don't like havin to stop- get off- fix the pad then re saddle. I prefer a fleece pad over anything. --my personal opinion. I definitely don't reccomend usin a blanket under a felt pad or on top.
That saddle looks like a good fit for (buddy) id like to see pictures of him tacked up with out the felt pad (blanket and saddle) from the front so I can see the pommel height on his wither- from the side- and from the back so I can get an idea on how it fits him with out the felt.. I know there are some diehard felt fans out there but every one I've used caused the same problems youve mentioned.. even the expensive ones.