lower the output volume

The final drive is the input to the final clipper, you are driving it VERY hard at +3.5dB and this is why you have high peaks in the final output level. This will cause distortion in the final clipper but this where the loudness vs clarity tradeoff takes place. Personally I never normally go above 1db drive to the final clipper. Please do bear in mind though that it is normal to have red peaks in the output meters as this is what is giving you the loudness on air. The red peaks do not get broadcast, this simply shows you the part which is getting clipped by the clipper, only the part below and up to 0dB goes out on air..

If the physical output level is too high, this is adjusted by the MPX or L/R ref level settings in the signal settngs box but this adjusts these levels invisibly, this simply attenuates what comes out after the final clipper. If you want to attenuate into the final clipper then this is done via the final drive slider.

The L/R and mpx ref levels serve as a final output level from the software into your soundcard, it’s just a variable attenuator applied to the final output after the clipper.
Don’t be alarmed by the red peaks in the output meter, this is intended as a visual aid to show you how much audio is being driven into the clipper (this is user controlled by the final drive slider). The red parts are what is being clipped by the clipper, nothing above 0dB gets past the clipper.
If there are no red peaks here, the clipper is being under-driven and your output will not be very loud.