You have to bed them brakes in. Did the brake come with resin or sintered pads? If the latter, than the brake in period will take a long time on a trials bike. The resins have to be bedded in as well.
When setting up the brake, did you clean the rotor with alcohol (I use 100% Isopropanol)?
Lever travel is at least 2-3cm on an SLX brake so this is nothing to be worried about. If the disc is true, take the wheel out, pull the lever once and put the wheel back in. The pad wear adjustment will have pumped the pistons closer to the brake so that you don't have to pull the lever that far anymore.
Other than that, an SLX brake is pretty much a plug and play brake.
edit: About the pad not covering the entire disc area. Try using a Shimano IS->PM adaptor. If that doesn't help, your IS mount isn't placed correctly. Although... I've had to put shims under two Shimano calipers in order to get the pads placed correctly. In my case, they were too low, which isn't really a problem. If they are too high, there's nothing you can do about that really.
Do your pads stand over the disc on the top?