retraction is a global setting.
Everything else just effects WHEN retraction is used.

so the 0.5 just means that the head has to travel half a mm over open space before it retracts. The odds of you having a lot of 0.5mm gaps in the print are fairly small - unless you're printing a print in place part with moving bits. In which case you definitely want it retracting before each move.
I tend to always set the movemtn to 0. So it retracks before crossing any gap.

can't see any problems with your picture - you expectations of what 3d printing can do on a cheap machine might be a little too high :-)