So after further testing, it seems everything is fine. The photos were in focus, but maybe a tad soft. I don't know if my expectations are reasonable in terms of sharpness at this distance with this size subject, but when I zoom into 100% in Lightroom, it just doesn't have that same crispness that I see with other lenses I use more regularly (like my 24-70 2.8 L or 35mm native EOS R lens). It looks plenty sharp at this size, but 1:1 in Lightroom looks softer. Nothing a little sharpening can't fix though I suppose!
Below is one of my test images shot on manul at 1/1250 sec f2.8 ISO 400. I had the lens stationary on a table and used the 2sec timer, zoomed in to 200mm. IS was on, mode 1, and I had it set to the 2.5m-infinity setting (which are the same lens settings I had in the initial trouble shot of the squirrel).
I suppose I just missed focus on that first shot, but my curiosity came from wondering HOW it focused where it did. I know it's possible the focus point wasn't as precise as it looked in the viewfinder, but I would think if I missed the focus point in any direction aiming for the squirrel, a different part of the photo would have been in focus (like the pot, or the grass immediately to the top of squirrel's head). In order to focus on the grass that was in focus, I would have had to have been focusing way down and to the left, or way down and to the right from the center/squirrel.
I tested this same shot below at f4 and f5.6. All were in focus and none seemed any sharper to me than the others at 100%.
I will continue to test some more real-life examples and hopefully I get better results than my initial test shots. I hope that I can use the lens handheld though as that is more practical for my use and it's not always possible to use a tripod with a timer. When hand holding the camera with this lens, I can hear the IS motor going as I move the camera around. I assume that is a normal function of the image stabilization system but sometimes I wonder how much noise is normal and how much is cause for concern.
Thanks for taking the time to read and comment. Appreciate the help.
"... it just doesn't have that same crispness that I see with other lenses..."
This is a 100% crop of the sample you displayed. It really looks pretty good to me.
I did lens correctoin. Did you do that when you imported it to LR?
"(like my 24-70 2.8 L or 35mm native EOS R lens)"
You do realize that lens resolution decreases as distance increases?
"I did lens correction. Did you do that when you imported it to LR?
I did not. I will try that." 
You should do lens correction as a preset (and any other setting that applies to all your photos) when importing to LR. You may want to add some sharping too. As, Raw files do not get any sharping in the camera the way jpg do. That is why a jpg can look sharper than a Raw at first.
"Retest at a distance that is 25-50x the focal length."
This is a standard recommendation for focus adjustment. In this case it really is meaningless as our test was to duplicate the shooting conditions in the original shot. Besides sometimes certain distances are more important than others. That is why that figure is just a suggestion. Apparently your camera has no focus adjustment anyway.
I really don't think you have a problem. You simply missed that original shot. There is and end to it. Go make some beautiful photos!
"... shot on manul at 1/1250 sec f2.8 ISO 400."
Not that I have anything against M mode but may I suggest you get up close and personal with Av mode. I think you will really like it. You can set a lower and upper limit to your SS if you like.
My favorite settings for smaller animals and birds is Av and I usually set the lens down one stop. I fix the ISO for the conditions but good daylight ISO 800 works. Average WB but this doesn't matter because I always shoot Raw.
This is nearly a 100% crop of the finch. I am hand holding my Sigma 150-600mm S super zoom at 600mm. Av mode f5.6, 1/6000, and ISO 1600. One shot and just the center focus point. Full range of the lens too.
It has lens correction and some selective sharpening upon import in to LR.
