In Italy we use that kind of grinding with moka pots.
with my Sama , the first pull takes about 18 - 20 seconds after the lever release.

It looks like half the grind is turkish size (the looks-like-clay layer just below the top) and the other half is vac pot size (the larger particles). Also quite a bit of channeling holes, unless I am mistaken? If the grind size varies a lot, this can be the cause of the channeling.

I would suggest to try another grinder, and preferrably a fresh (less than a month old if bought in a commercial package with backflow valve, but even better is if you can roast it at home for yourself, then you really know how fresh it is) bag of beans.
Grinders that will do are the ones that grind for espresso. Flat burr grinders are more common, but there are a couple of conical burr grinders with consumer-friendly pricing too.
Without naming any particular model or brand, when deciding what grinder to try/loan, look for the kind of burrs that cut the coffee, not the ones that crush it. Of course, you could also ask your local barista to grind some up for you, but getting the grind right will take some experimenting and several re-visits to the bar.

This great web page: http://www.kwilson.fsnet.co.uk/burrs.htm is still on the web, thanks to mr. Wilson. It has images of most of the available burr types on the home market. Good flat ones for espresso look like the Faema MP78, Mazzer Mini and Rocky on that page. Bad flat ones for espresso are the likes of the Russell Hobbs, Petra, and Gaggia MM.

Well,

Still playing around, improving a little but not much. I am probably going to buy a vintage hand gringer from Orphan Espresso, just can't bring myself yet to drop $400-$500 on a high end grinder.

In terms of adjusting pressure, the suggestion was 1/8 turn... The question is, which screw??
Red or Green?

one more tip to avoid "craters": pull the lever down slowly until you hear the water flush . Stay steady for some seconds , than go down again. wait the first drops than release the lever.

I would not give up on the grinder just yet. I think the whole business of needing a $1000 grinder is overrated. You may need to open the grind enough to be sure you don't have a lot of fine powder. Just disregard the larger grains if there are a few. (not saying a better grinder won't help make things easier and more consistent).

Try filling the basket close to the top with a grind that will allow a very slow stream the first pull. The second will be a little faster.

If you think its too hot (it says ouch! very loudly when you touch the group, or taste the espresso right after the pour), you can test this easily. Fill the machine and turn it on, and grind the coffee immediately. As soon as the machine is up to temp (light off), let out the false pressure once and wait a minute. Pull the shot without any warming of the group. A cool group will sink a lot of excess boiler heat off the brew water, getting it down to proper temperature.

I just did this a minute ago. The espresso was very good, and it reminded me of why I always like to brew with a cooler group.

Lvx wrote:one more tip to avoid "craters": pull the lever down slowly until you hear the water flush . Stay steady for some seconds , than go down again. wait the first drops than release the lever.

Hi Lvx,
I am a new Lusso user and I find your tip here to be interesting. Are you suggesting that the preinfusion process should begin with the slow opening of the flood gate with steam and gentle gush of water instead of a swift pull to the bottom? On my machine there is a slightly delayed action when I bring the lever down, only steam and droplets would be released for a split second before the shower head releases water in full force. Is that delayed action meant to help the puck to harden and expand before full pressure hits the surface?