Welcome Blazen,
First of all, did you season your 55? That is an absolute must. Follow the CS Instruction book.
2 oz of wood is the approx size of each wood chunk that CS supplies. You will learn that for most smokes, depending on the amount of meat you are cooking, that 1 or 2 chunks is enough. For 2 slabs, 1 chunk is enough unless you want a really heavy smoke flavor. That is a personal taste issue.
As for temp and time, read the forum and especially read Smokin' Okies BBQ guides posted at the top. Rarely do you need a cook temp setting higher than 225. Time is dependent on the weight of whatever you're cooking. Probably 3.5 hrs is not enough for babybacks depending on your preference for doneness. You said yours were dry, but you did not say if you opened the door to peak. If you did, that could be your problem. The CS is pretty fool proof because it retains a lot of moisture and does not need tending like a stick or charcoal burner. No need to open the door.
Most Q'ers will cook wiith bone side down, if laying flat. Many use rib racks or the hangers so they can get more slabs in.
Rubs are strictly personal taste. The CS rub is good and there are many rub recipes posted throughout the forum and forum recipes.
Most important, read the forum including the archives. Lots of good information and great recipes. Good luck!!!