If you want to print a 160mm by 160mm square, you need a safe printing DIAMETER of:
SQRT((160*160)*2)) = 226.27
So, you need a safe printing radius of 113 (and a little more)
Also, you need x=0 and y=0 to be in the center of your build plate.
From your photo, it <looks> like you have enough room.
If you move the print head by hand with the printer off (SLOWLY so you don't damage your drivers) can you move the extruder out to where the corner would be for each of the corners without jamming on anything?
If you can, I would increase the safe printing radius and try a print.
I don't know why your outer wall lines are too far inside where they are supposed to be.