I have about a 1” gap between the fan shroud and the radiator, this can’t be good for cooling efficiency. Should there be some type of foam or something in this gap?
You may be able to get away with some weatherstripping if this bothers you. I've had luck at my local hardware store where they sell adhesive backed weathertrip channel. Not sure of the heat resistance though, but it's worth a shot!
You could use a rubber door jamb seal or similar, the type of seal/gasket that attaches on a pinch weld. It would make the shroud more efficient/effective, but as is, its fine the way the factory has it.
You will get more air thru the radiator if you put a dam just under the radiator there was a article on this a while back I think you used one from a Camaro or Firebird from the 80's If the fan blades are at about the 1/4 to center of the back edges of the fan shroud the air will get pulled thru correctly. At speed the fan does not do much work unless the fan clutch gets hot from radiator then the fan will lock up. Other wise I would not put anything in there that could come loose and get caught on the exhaust or get wrapped around a fan pulley or get stuck to the fan itself and watch it come thru the hood from the fan whipping it around. Take a picture of the system