Rear derailer shifts fully only in middle of cassette and loses alignment with cogs over time I didn't even realise it, but I had been using the double shift Rapidfire feature on shimano's mtb sti's to move the chain only once up the cassette. Thats two clicks for one change. Its only when I got fed up with having to 'upshift' once to bring it to proper alignment with the desired gear, I decided to tinker. 

That's when I spent about an hour trying to get it to shift properly with the barrel adjuster and it just wouldn't.

After thinking about it, it is clear that the right shifter only pulls enough cable on the smalest one or two cogs. I had naturally learnt to use two lever clicks.

Some things: 
-I have got a new cable that I bent a few places when I installed it, and ok outers. As the upshifting is fine, im ruling that out.
-its all 7 speed, from experience right hand shifters always break down. Specifically, m095 xt sti, lx m560 rd, new hg41 cassette/chain. I have changed the rd with identical results.

Service the shifter or do I need to set the cable up in a specific order?
There's not much that could happen to cause the shifter to pull and hold an incorrect amount of cable when you click it. 

A simple test to see what the shifter is doing is to loosen the cable anchor (or slacken the system by pulling a housing out of a stop), pull the housing away from the shifter, pull the exposed cable there gently taut with pliers, and shift back and fourth through the range. You'll be able to see if it's working normally, missing shifts, releasing too many steps at once, etc.

Once they're this old, Rapidfire/STI shifters are prone to issues with lubrication around the pawls getting gummed up, causing engagement problems. From your description it sounds like this may be what's going on. This is common and easy to fix with some cleaning and relubrication. However, it's also the primary mechanical problem with these shifters that's fixable at all. If there's a broken spring involved, which is also pretty common, there's not much you can do.

To service them, the important thing is to never under any circumstances take apart any part of the mechanism itself. Depending on the shifter, there are usually covers that can be removed or nudged aside to let you spray the guts and/or work the pawls around. The usually recommendation is to use a silicone spray lube because it won't degrade plastic. If possible I like to put a small dot of grease at the pawls, roughly emulating how they come new.