Indeed you have excessive picture width, poor Sonic is so far off the left he's invisible! The reason I asked that is to determine the type of failure - bad pincushion but normal width is likely to be a misadjustment due to age and/or component drift, but when picture width is severely affected your pincushion correction circuitry has failed completely, therefore as you promptly found out adjustments don't have any effect due to the non-working circuitry.
Fortunately you've come across a good quality service manual for your chassis. I've circled in red the area you should be focusing on, which is the east-west (aka pincushion) correction stage:

E/W correction in a nutshell works by modulating a compensation waveform directly into the horizontal deflection in order to counteract the inherent distortion of the electron beam hitting a non-spherical surface, in effect pre-distorting it "the other way around" so that it looks correct when displayed, much like today's VR headsets require the GPU to deform the picture sent to the LCD to counteract the optical distortion caused by the lenses in the eye-pieces. We suspect complete lack of distortion correction so we either have no input to the circuit or something has broken in the output path. Input comes from R414 from IC101 pin 45 where the correction waveform comes from, while the coupling (output) between the two stages is at the top left by L402 and R411. R411 is likely a resistor designed to fail like a fuse so it's a likely suspect for lack of output.
If there's no bad solder joints or severed traces my shotgun/I'm feeling lucky approach would be to replace R411 if found high or open circuit and C410 preferably with a 160~250V model since these tend to live a hard life and cause these kinds of problems, not a bad idea to also check L402 for continuity while you're at it. More advanced troubleshooting would involve suspecting on the rest of the components like Q401/Q402 or even the large ceramic caps on the horizontal deflection (C409/C414/C415) and checking that IC101 pin 45 is actually outputting the E/W correction waveform.
BTW is that Sega console running at 60Hz? Looks like there could be a bit too much height as well (or maybe it's just me, I tend to prefer a slightly underscanned picture for my 240p video games).