NavList:

Not that it's a huge deal in this discussion, but I often use shades on the moon when shooting a star lunar.  The caveat to this is that I am doing a more "modern" lunar (sans altitudes) so that I am not shooting it at twilight.  I find the moon bright enough to obscure the comparing star so that I find it better to add a shade to the observation.  

While I've never used the sextant in the OP, I have used it's "big brother" and never felt the need for any shade besides the ones that came installed on the sextant.  The addiitonal shade in the photo is far from optically flat, and could certainly be adding some ghosting to the observed image.  I would suspect that or a damaged telescope before thinking about the silvering of the mirrors, but it's hard to diagnose the issue without photos of the ghosting or seeing it in person.

I agree with the use of a planet or bright star (or even the moon) for sextant adjustments and determining index error.  I am not a fan of the sun for this purpose, and use it only if I need to.  

I've never tolerated any side error in my sextants.  I can deal with residual index error, but side error is something i always try to correct to the absolute best of my ability.

Jeremy