ideal dérailleur height for a Deore on non-round/oval Cranksets (e.g. a Biopace)? Reading on every site about front dérailleur adjustment, the distance from the bottom of the outer dérailleur plate to the bigger crank cog should be "one penny". 



Mine is around 1cm! it does shift OK. not perfectly, i have to spin it very slowly and constant for the chain to move. but works. never dropped the chain or jammed.

The front dérailleur is a Shimano FD-MT60-AL, Deore (if you look at the pic here, it's showing a much closer distance, but it's also showing a rusty chain... so I will not mimic it right now :)

The crank is a biopace

Here's a pic of my bike. Since the crank is not round, i've set it up on the "closest" point to the derailleur


Here's another pic.


Another angle. There's no height adjustment, and there's no mark on the frame suggesting it ever was at another position. Can it be some lack of lube internally or bad cable messing things up?
The bottom of the front cage on your front derailleur should be about 2mm higher than the chain ring, when the derailleur has no cable tension. 

That is, when it is in the smallest front gear position.

On Bio-pace rings, that doesn't change. but it must be measured at the point when the chain ring comes closest to the derailleur cage. (The hardest part of your large ring.)

Some older derailleurs may have had different expectations. But not that I am aware of.