I don' t think you have it set up wrong but I use a tubed peepsight so don' t take that as gospel.
Do you still see the sting if you look past it and concentrate on the pins and the target? Coz it might just be something to get used to.

Otherwise, I have seen the tubeless peeps that split the string into 4 strands. That way you can fiddle around with were and how you split the string untill you are looking between the strands with 2 strands on each side of your vision. These might be more what you are looking for.

Good luck.