if the 17 isn't allowing you to get a position in the drop out with a pair longer or shorter links in the chain where it will run tight, then i'd go with a 16 or 18 T sproket or a half link, but I'm suprised you cant find a spot.
are you saying of its sat where the yellow arrow is (with a shortened chain from running it with 21) if you add the pair of links back in can you not take-up the slack? there looks to be more than a links worth of travel up the drop out.