1/8" sounds a bit low. I usually need to go 3/8" to 5/8" above level on my bows - 3/8" if I shoot split finger (which I do with my one D-type longbow and 5/8" (approx) for 3 under on my other bows. I'm measuring to the top of the arrow nock, or bottom of the top nocking point, in case we are measuring differently.
The fact that you can get 10 perfect arrows makes it sound like a release issue, but you might try jacking it up 1/4 " and see if it changes things.
You will have to loosen that crimped on nock point, but you may be able to "screw" the tied on nock up the serving.
I'm interested to see how this works out. And, I'm curious to hear how many others nock that low.