The "poor man's" way is to put a small rubber washer inside the forend where the screw goes, and just tighten it snug. Then, place the front rest at the barrel hinge. Just to be sure, you can try taking the forend off completely and shoot without it, resting it at the hinge. Just remember to hold onto the barrel when you open the action, or that clanging sound of metal against concrete will be your new tire iron... :eek:
Also, try the Winchester white box ammo if you haven't already; most of the .223 Handi's love it, and the Ultramax 40gr V-Max.