Howdy
It would help identifying your Marlin if you supplied a few more photos, particularly of the entire rifle.
I'm going to go out on a limb here because I think the only lever guns Marlin chambered for 357 Magnum were the carbines.
The old Marlin web sight used to show all the models, but the new website does not show much. (Probably waiting for Ruger to decide what models they are going to make.)
A quick internet search showed that only the carbines were chambered for 357 Magnum.
https://en.wikipedia.org/wiki/Marlin_Model_1894
I have a Model 1894CS that is chambered for 357 Magnum. The barrel is 18 1/2 inches long.
This is what the rear sight on my 1894CS looks like.
Here is another view of the rear sight. Yours appears to be missing the rear sight blade as well as the elevator. The elevator is the ramp shaped piece with different notches to raise and lower the rear sight. You will notice in this photo that there is a pin near the bottom of the rear sight. That pin is what holds the blade to the body of the rear sight. I doubt you could have hit any targets at all with the rear sight blade missing. I suspect you accidentally whacked the rear sight and broke or bent something, or perhaps sheared the pin. The blade would have fallen off, and the elevator which is only held on by the spring tension of the body of the sight, would have fallen off too.
Not all Marlin rear sights look exactly like this, this one would be called a Semi-Buckhorn rear sight. Buckhorn sights were very common on lever guns, not just Marlins but Winchesters too. They came as Full Buckhorns, Semi-Buckhorns, and Flat Top Buckhorns.
This is a Full Buckhorn sight on a Marlin Model 39A 22 Rimfire. Notice how the 'horns' almost form a full circle. This style of sight can be used as a 'ghost ring', where the eye naturally centers the front sight in the center of the 'circle'.
This is the rear sight on an antique Marlin Model 1894.
This is a Flat Top Buckhorn sight on a Winchester Model 1894.
Buy a Williams peep sight and you will have a 100 yard pop can killer.
There is absolutely nothing wrong with Buckhorn rear sights. I have them on lots of lever guns. I do not have a Williams peep sight on any of my lever guns. The Semi-Buckhorn is the most popular, the Flat Top style affords the most view of the target, some hunters prefer that. The Full Buckhorn will obscure most of a target, just like a peep sight will.Not the best for field work.
This is the front sight of my Model 1894CS. The bead is drift adjustable for windage. The groove was for a hood. I don't remember if I removed the hood or if it came like that.
The barrel markings should tell you just which Model 1894 you have. I bought this one used, it does not have micro-groove rifling, it has standard ballard style rifling. I have no idea when it was made, but I bought it used about 20 years ago.
No idea why your Marlin only holds three rounds. Do they come to a hard stop so you cannot shove another one into the loading gate? My Model 1894CS originally held 10 rounds of 38 Specials and 9 rounds of 357 Magnums. I had a friend shorten the follower (the part the spring shoves against the rounds in the magazine tube) a bit so now it holds 10 rounds of 357 Magnum. There is a screw on the underside of the front of the magazine. This screw holds the magazine cap in place. On mine, the screw runs all the way up into the barrel. To open the magazine up, remove that screw.
BE CAREFUL. The cap is under spring tension from the magazine spring. If you are not careful, when you remove the screw, the cap and follower will go flying and you will never find them again. Trust me on this. Keep your hand over the magazine cap while you remove the screw to keep things from going flying. Another good idea is to place an empty box in front of the muzzle while removing the screw. If everything goes flying, hopefully the box will contain them. If you find a plug in there, you may find the magazine spring has been clipped to allow a plug. In that case you will need a new, full length magazine spring.
Here is a place that stocks Marlin parts.
https://www.midwestgunworks.com/marlin/gun-parts.html
Here is another.
https://cfnparts.com/index.php?route=information/information&information_id=15
Marlins are very popular with Cowboy Action shooters. Here are a couple of websites that stock parts for Marlins for CAS, but a lot of the parts are standard.
http://www.pioneergunworks.com/marlin-rifle-parts
https://www.longhunt.com/web/index.php
PS. My Model 1894CS is a very handy little rifle. I bought it for my wife when she used to shoot Cowboy with me. She did not like my 24" barreled rifles, they were too heavy for her. It is a very handy little rifle at the range when loaded with 38 Specials, and it is a pretty serious rifle when loaded with 357 Magnums.
Here is a hint about ammo: Generally speaking, Marlins, with their tilting carriers prefer either Round Nosed, Flat Point bullets or Truncated Cone bullets. Semi-Wadcutters can sometimes be finicky loading, the sharp corner can sometimes catch as it is chambered. This one fed my Semi-Wadcutter reloads fine, but sometimes they can be a problem.
Two of my 38 Special reloads. 125 grain Truncated Cone on the left. The Marlin really likes these. 158 grain Semi-Wadcutter on the right. My Marlin feeds these well, yours may or may not.
More 38 Specials. Left to right, commercial 158 grain lead Round Nosed bullet. Not recommended for lever guns with tubular magazines. Next is a Round Nosed, Flat Point commercial load. Sorry, I don't recall the bullet weight off the top of my head. These are good for lever guns with tubular magazines. My Truncated Cone and Semi-Wadcutter loads are to the right.
