ok, my confusion with getting my label line to touch the alignment was, when I was asked for offset, I clicked, when I should have entered 0 for the offset.
Now my problem is with the dragged state and It will only label correctly on the Left side. If I want a label on the right side, I have to figure out how to create a style for that (Thanks to C3D_User for the heads up on that!)
See attached for dragged state goal.
If I have two of my labels to close together, and need one(the red one) to move, this is how I would like it to look. I am open to other ideas for a standard though, so feel free to let me know how you all handle these situations.