As the smoker seasons, the wood will burn better. Having some food to smoke will also improve wood burn as it acts like a heat sync.
On my last pork loin smoke, the wood was discolored all over and charred on the bottom and some of the sides. The meat actually had more than enough smoke flavor. So base your results on the flavor of the meat and not necessarily the looks of the wood.
Lift your heating element so the end touches the wood box. Place your wood towards the front of the box with the edges right next to the holes. These will also help burn.