It has been a genuinely good platform for clients... FE needs some work to keep this.
Try adding this to your Custom CSS, hoping it will hide the embed warning message and should allow you to shrink the block so you don't have to leave it overlapping the text block:
html.squarespace-damask .sqs-blockStatus {
display: none !important;
}
If that doesn't work, then you can do the same thing in Chrome's developer options, which will temporarily remove the message and allow you to shrink the block.
Glad that worked, it's a strange thing for the warning message to affect the layout, I'll report it, maybe it'll get fixed in the future. Finger crossed.