Some good progress. Finally got everything collimated tonight including the newtonian side. The aluminum shroud for the secondary was stressing the glass and causing the distortion. Losening the screw that holds it did the trick. There is a very slight sign of astigmatism when very close to focus but nowhere near what it was. I don't think it will be and issue with the CCD given the image scale as it is so close to focus, might not even notice it. Will see when I do a full fov shot. I also tested the newtonian corrector. Seems to do a decent job. Will post before/after pics later on.
This is the diffraction rings for the newtonian focus IN/OUT. First part of the video with the SONY NEX-5 , second with the 120MM.