Shot my new gen2 sub2000 for the first time yesterday and at 10 yards, it was grouping in the size of a thumb. Shooting 5 inches low. That seemed pretty low for just 10 yards. I tried to adjust them again today, turning the front post to the right. Slight improvement but at 20 yards, off the target entirely.
Not sure what to do next. The front sight seems squirrelly and a bit springy. Nothing like an AR which is rock solid.
IMO the Achilles heel of the Sub 2000 is the front sight (or sight design in general).
There are people who get them and have no problems out of the box sighting them in, but there are others who get them and can't adjust the sights far enough to zero beyond short distances.
Out of the bx mine was like yours. I sent it back to KelTec for review/fix and when I got it back I could get to zero at 25 yards if I adjusted the sight all the way down and all the way to the left. Anything further than that and I have to use Kentucky windage and compensate when I go to the 50 and 100 yard ranges.
For my purposes this isn't a show stopper, so I'm not going to send it back again, but in your case I think you should contact KelTec and have them work on it.
From what I've read they've been doing changes/improvements so you may get an updated sight.