Mr. Monkeyarms
Cruisin' on my Bluebird
After all of these great suggestions that I was thinking all of the same things, I went back to post #7 to look again. The pic and your description lead me back to my original thought. The derailleur and hangar could probably use some fine tuning. Both pulleys should be in line with the gear. Your bottom pulley looks inward a touch. Had my road bike get knocked over on the drive side a number of years ago that tweaked it just a bit so the smallest cog spit and sputtered. A couple minutes with the proper size, tight fitting hex wrench and limit screw tuning had it running smooth as butter.