the upper coils seem to have decent spacing, but my lower coils are touching. I would assume this isn't right. I am altogether not so excited about my suspension. It seems too harsh for the amount of body roll still present. The springs are advertised at 450 lbs/inch front and 500 lbs/inch rear and the car still rolls quite a bit in hard transitions. The Bilseteins have about 100k miles on them. I think I need something new?

The compressed coils are simply to take up the space when the car is in the air. They're called dead coils, and when the suspension is functioning normal, they play no roll in the rate.

When the car is in the air, the suspension goes to full droop and the spring will extend. On stiff spring, they add dead coils so the spring won't fall out, or be loose within the spring caps. It's a TUV requirement, and in general good practice.

One downside to the dead coils are that moisture and such can cause then to corrode a little more quickly. If you get dirt or debris between the coils the powdercoating will wear more quickly exposing the bare metal.

This really has no bearing on the overall spring rate since they're compressed.

Your ride comfort mostly comes from the shocks. With over 100k on your shocks, I'd say you're due for a rebuild. Bilsteins get harsh with age as the oil deteriorates inside them.

I'd probably recommend going with S4 KONI shocks. They'll take the edge of the harshness, and still provide plenty of damping for the springs.
You won't notice a ton more roll reduction but you'll have a much more comfortable ride.

the paint is coming off the coils where they are touching. I think I'm going to make the jump to Vogtland coilovers in the spring. Thanks.