If you have a Dremel with a cut-off wheel, yes, cut that screw close to the case and replace it. That one is too long anyway. You might try straightening it just a little first so the bend isn't as severe near the case.
Before you reinstall the exhaust you can help it seal better. Clean the gasket surface of the flange then 'paint' it with magic marker. Lay a sheet of sandpaper, about 150 grit will work, on a flat surface like a counter top or better yet, a sheet of glass. Swipe the flange across the sandpaper a couple of times then check it. You'll see high and low spots. The flange is usually warped from the welding process and that makes for a poor gasket seal. Keep sanding, or filing, until you've removed any high spots and you have a uniform/flat surface on the exhaust flange. Use a gasket material made for high heat/exhaust applications. Auto parts store should carry it. I like 1/8" material.
Repeat the above process on the intake manifold flange. If yours is steel it will be warped just as the exhaust flange is. I go a little thinner on the intake gasket. 3/32" is good.
You can check the mating surface on the cylinder but they are usually pretty good. If it needs some work either do it with the cylinder removed or stuff the port with paper towel to keep any filings or abrasives from getting into the cylinder.
From an earlier photo it appears that there is a broken engine mount stud. They usually aren't threaded in too tight, unless someone used thread locker. If it protrudes from the case enough to get a grip on it with vicegrips or pliers, you can unscrew it from the case. If it is broken off flush with the case you can try cutting a screwdriver slot in it and use a screwdriver to back the sud out.
Personally, I don't use studs and nuts for the intake, exhaust or engine mounts but instead I choose to use Allen head capscrews. They are all 6mm X 1 and lengths will vary but generally somewhere between 15 and 24mm will work.
Hope this helps a little. And wake up that 'little guy' and put him to work
Tom
