Moen tub spout leaks?

Hi I'm installing a new Moen Kingsley diverter tub spout and it leaks out the back. Allen screw was snugged enough to cut into the pipe. I checked the o rings and they look ok.

Do I need some sort of sealant or lubricant here?
Will tightening the allen screw a lot help? I am worried it will punch right through the copper pipe. Could i grind the screw shorter so it clamps the plastic rings without cutting the pipe?

Or is there something else that I am missing?

You may have distorted the pipe enough by tightening it too much so that the o-rings cannot make a seal anymore. The setscrew is only there to hold the thing in place, not make a seal (at least on the ones I'm familiar with). If the pipe is not round and smooth without dings or scratches and the o-rings intact without cuts or nicks in them, it is hard to impossible to get a push-on spout to seal.

Doesnt look distorted, though I see what you mean.
Could smoothing the pipe with emory cloth help? Or some kind of lube or sealant? teflon tape?
Or does someone make oversize o rings?

Cant replace copper pipe stub without busting brand new tile...

IF there is a burr on the end of the pipe, it's easy to slit the o-ring when pushing the spout on. The pipe surface needs to be smooth for the o-ring(s) to seal. Really fine emery cloth might help, but probably not. If it's no longer round, you may need to find the screw-on version of that spout and solder on a threaded coupling. Getting it just the right length can be a challenge so the spout tightens up against the tile and doesn't leak. For a slip-on spout, I don't think there is anything you could add that would help with the seal. You may want to call Moen and see what they have to say.