The steam from my unit is fairly good. I give it a little flush before I start on the milk and there a few specks of water but thats it.
Im new at steaming milk so cant really help there... but Ive been able to get a decent amount of foam. A few larger bubbles, but for the most part its shiny microfoam that pours well. A pity my puring skills are non-existent.
My grinder was too fine when I first tried it as well. Even at a setting of 2 it wasnt fine enough. So I took the top off it and repositioned the burr (took it out, cleaned and then put it back in as tight as I could) and now its fine, no tools required. My em450 is grinding about perfect at a setting of 13 now.