I watched that whole video wildcat, it looks like you have a few potential issues. Id start with completely taking your car apart and check for anything binding and or bent. New arms wouldn't hurt.
Also maybe its just me, but it kinda seems your car is too soft and its unloading in a lot of those corners that the suspension is being tested plus it looks like it bottoms out very hard. Maybe just your shocks are low on oil???
Also like the above posters mentioned, possibly way too much brake.
Could also be a tire choice causing it to be harder then normal to drive, maybe you can lower your steering dual rate some to help take some of that edge off since it looks like you have too much steering for how that car is handling.
Definitely need to talk to that guy that lapped you, maybe he can drive your car and make some recommendations.
as far as diff goes, check your outdrives and driveshafts for wear, that will cause a ill handling car even if everything else is in prefect working order.
And as far as setting, i would just set it to 1/8th out and leave it.
good luck