With the old pump (like yours) I had it setup like that and I was happy with the skimmer and it's performance.That's true the outflow is submerged. I'm currently happy with how the skimmer performs and it's also silent. The manual says for internal skimmers the outflow pipe can be set in any direction. Only recommendation is that it is directed away from the pump inlet to prevent re-skimming water which can affect performance.
I'm not sure I understand the reason turning the outflow out of the water has helped, but good to know that's been the experience of a few folks. I imagine it reduces that back pressure on the outflow. Makes sense that would require adjusting the pump wattage and interesting that has improved the quality of the foam skimmate.
The issues started when I got the new pump. That's when it got noisy, underperforming, etc
And yes, I assume it has to do with the back pressure on the outflow.