Didn't notice til you said something. The reign has a bit of chain growth to deal with also. Took me a few tries to get the chain length right on mine.
Take your shock out and move the suspension through its travel. I would be willing to bet that chain binds up your travel and limits it. The reign has some chain growth. I don't have any pictures of m III be in the 36t gear but mine was quite a bit longer than that.
Not holding air? I found until I have my first real ride is when they hold air better. Once you fix the chain issue get it out and ride it. With the chain that short on the reign I limit your suspension travel. I speak from experience on this. While mine was the reign x the only difference was the shock stroke length. 2" compared to 2.25"
It's all good now I fixed it and honestly the chain is fine its not that toght. You see the gold chain links. I added those as @tnf had been running it just fine and it was even shorter then than it is now.