Lowering the saddle (and making it more level) seems (in the photo at least) to make you look more comfortable on your bike. Inserting the stem quill was necessary for safety but doesn't seem to affect your position greatly. Trek and other replies say otherwise but I still think that frame is too small for you! I agree with the reply that mentions a disproportionate torso length for your stated 5'7" height. I also agree with the suggestion to set the saddle height based on the distance from the floor to your pubic bone. That measument is sometimes referred to as "inseam" but isn't the same as the inseam value for the pants you wear 😉. There are lots of online articles on how to measure your inseam and how to calculate the saddle height. All of the methods to measure your "inseam" should give the same result. Calculating saddle height is a bit nebulous and can vary based on the opinion of the person describing the method. All of the methods will, at the very least, give you a starting point. You can adjust to your comfort from there.