....but my vision is 20/20 with my contacts in and I really just can't see that far out clearly. And if I could, the white dot of my front sight covers half of the whole target. I changed out the rear sight for a black serrated rear sight from 10-8 Performance because I had problems focusing on the front dot with the 3-dot setup.
From this description in your first post and in your follow up post a few above this one it really sounds like you've got some vision issues going on that are related to your contact lenses. Let me explain since I recently went through the same thing with wearing corrective glasses.
While my glasses did restore my vision to 20-20 the prescription produced a very definite problem with focusing on closer in objects. Anything less than 5 feet away was very hard to see with any clarity. And obviously my arms just AIN'T THAT LONG !
I went back to the eye doc and he confirmed that the glasses worked that way. He could add in some shorter focus correction but then I'd be at the same disadvantage for longer distance where all the distant stuff would be fuzzy.
In your case the fact that you can't clearly see a target at 25 yards suggests to me that your contacts are limiting your focusing abilty in the same manner as my glasses. But in your case your eye doc gave you a prescription that is aimed more to closer in and moderate distance to correct your vision for the more day to day detailed "desk" like functioning.
So all in all I'd suggest that you go back to the eye doc and talk things over with him about your prescription and your difficulty in focusing on more distant objects.
The final solution in my case was to go back to not using my prescription glasses. Luckily my left eye is sharp enough that I can see and shoot decently well. Well enough that I can see and put my shots generally within a 6 inch diameter at 25 yards. Which is good enough for the sort of matches I like to shoot. And well enough that with a bag rested rifle I can manage 4 to 5 inch groups at 100 yards using plain iron sights if I have the right sort of target shape to work with my questionable vision.
From your description these sort of results isn't going to happen though. So it sounds like you need to work with that eye doc to make it happen.
Now, to the sights on the gun and how you're using them. With handguns used for target shooting at various distances you want to sight over the lined up upper line of the front and rear sights. The dots on the blade and rear U are only there to aid in quickly aligning the sights in dim lighting. You're not supposed to actually put the dot where you want the hole to appear. The proper way is that when you line up the upper edges of the rear sight and front blade that the bullet hole will be half above and half below the top line of the front blade and centered on the width of the blade. If you switch to using the sights this way you'll be able to see the upper half of the distant target and line it up with the center of the top edge of the front blade for a better shot at hitting where you want to hit.
The other classic handgun hold method is the 6 o'clock or "lollipop" hold where the round bullseye is perched on the top of the front blade. The issue with this is that it's highly distance and bullseye diameter dependent. It's good for serious match bullseye shooting where you're using the same targets at the same distance ALL the time. But if you try this with a variety of targets at a variety of distances you'll end up hitting all over the place. You should STILL have good group sizes if you do. But the groups could be up and down by some amount depending on the overall geometry of the situation.
Other than that it's all about developing a good stable hold and trigger pull. You're actually what most of us would call pretty much a rank beginner with that low a round count. Very likely you could use some coaching on hold and grip technique to achieve a truly steady and non responsive hold. By this I mean your hands don't try to fight the recoil. So many try to anticipate the recoil. We call it "flinching". This never works. The optimum hold is for you to just hold the gun neutrally but with firm support and let it happen.... which isn't as easy as it sounds.
I'm a huge believer in usng a .22 handgun as both a training aid and for it's cheapness at achieving a big amount of trigger time to develop, learn and anchor good habits. But as many will be quick to say it can also entrench bad habits.
Some folks are good at self criticism and will try a lot of things and learn how to do all this successfully on their own or with the aid of written or spoken advice. Others need a hands on coaching session or two from a good instructor to point out where they are messing up.
In your case it sure sounds like some discussion with the eye doc that gave you that contacts prescription is the first step.
For the rest alter how you look over the front sight for starters. Next get on You Tube and search for "hand gun grip" or " pistol gripping". In particular this link for a promo about a Todd Jarret video has a lot of excellent grip hints.
http://www.youtube.com/watch?v=ysa50-plo48
