I pulled the latch/switch from the upper hatch, cleaned and lubed it with white lithium grease.
The mechanism works well now and releases by both the outside and inside levers but the switch that controls the dash door ajar light is not grounding so I just unplugged it. Dash light is off with the hatch open or closed.
As for getting the the hatch to close tighter, you need to replace the tailgate striker screws with bolts to shift the striker plate forward. Mine closes nice and tight now.