What is your finish setting? Every part defaults to "polished" and I really don't think it should. If your parts are set to polished, it's going to think there is less drag than there is.
Cutting your body tube shorter is not a great way to reduce weight (tubes are light) and can screw up your stability.
Also, are you using the actual weight of the rocket in your simulation or letting Rocksim calculate the weight? If your rocket is built you should input the actual weight.
Ahh, but a shorter body tube reduces the 'wetted area' of the rocket which is one of the main components of drag. The best way to improve altitude is to make the rocket as short as possible. With many rocket/motor combos, you may actually have to add weight to get the best altitude, regardless of length.
With regards to the OP, the launch lug is way off - it's positioned well behind the rocket and is impossibly small. I would correct that. Unfortunately, large lugs can make a big difference in drag and are not always properly accounted for by RS. Here is an excellent article by Tim Van Milligan on the subject:
https://www.apogeerockets.com/downloads/PDFs/launch-lug-drag.pdf
On all the minimum diameter rockets I fly, I use a tower so launch lugs/rail guides aren't an issue. You can use fly-away guides to achieve the same purpose, but they are expensive for a 3" rocket.
Finally, as has been suggested, you need to change the conditions to match your actual launch conditions and location. For example, in OpenRocket (I don't have RockSim) I uncheck 'Use standard international atmosphere' and enter the actual air temp and barometric pressure. Also, once I've set the wind speed and variability, I uncheck 'always launch directly up-wind or down-wind' and enter the actual launch angle and direction relative to wind. That can make a very big difference, especially if it is a windy day. Also, run the sim multiple times - based on the wind settings you will get very different results with each run. For example, in OpenRocket I set the wind speed to 15MPH and standard deviation for 5MPH (yes, extreme settings but to illustrate my point) and here are the altitudes I got from 10 simulations:
657 ft
679 ft
634 ft
606 ft
551 ft
632 ft
656 ft
691 ft
640 ft
596 ft
Low: 551, High 691, Average: 634, Variation: 140ft
I think in RockSim you can plot the angle of attach during the flight and it will show you the variability on successive runs.
Good luck,
Tony