We wish to have roughly 2 dBm of output power on each line coming out of the RF distribution box. So I adjusted the attenuators inside the box to get this.
I also looked at why the 2x output looked so distorted and found that the input power was around 17 dBm whereas the maximum allowed (as per the datasheet of Minicircuits MK-2) is 15dBm. So I increased the attentuation on its input line to 5dBm (up by 2dBm) The input power levels are around 14.6dBm now and the distortion has come down considerably. However the net output on the 2x lines is now down to 0.7dBm. We will have to amplify this if we need more power.
The schematic and the power output are now like this: