Have you shot this using a rest or sand bags to eliminate human error? At what distance were you shooting? Did you see any change in impact when you were raising the rear sight?
Not to say you are, but this is a common occurrence when people are anticipating recoil, unconsciously the shooter pushes the muzzle down just before the trigger break.
If it is the gun, you could file down the top of the front sight to raise your point of aim as well, or have a gun smith do this. It would accomplish the same thing as getting a higher rear sight. But don't use a laser to gage when to stop filing. Just file a few thousandths off and then retest using a pistol rest or sand bags.
I'm assuming this is a 45 colt?! If it is a 45 colt try some 300 grain bullets as they will impact higher then 240-250 grain bullets.
The only other thing I can think of, since this is a used gun, is the previous owner may have put a different front sight on it if it is one that can be changed out.
Let me know what you find and I'll try to help you out.
